April’s Notable Cases and Events in E-Discovery

1. A ruling from the U.S. District Court for the Western District of Missouri denying a motion to compel the production of documents off of privilege logs based on the crime-fraud exception to the attorney-client and work product privileges.

In Consultus, LLC v. CPC Commodities, 2022 WL 345653 (W.D. Mo. Feb. 4, 2022), U.S. Magistrate Judge Lajuana M. Counts denied a motion to compel Defendants to produce documents from their privilege logs based on the crime-fraud exception to the attorney-client and work product privileges.

In this case involving claims of computer tampering, misappropriation of trade secrets, copyright infringement, and a number of tort and breach of contract claims, Plaintiffs alleged that they owned and developed a software platform for which Defendant provided supporting IT services. Plaintiffs alleged that Defendant accessed their servers without authorization and downloaded proprietary files and databases they owned without their authorization or knowledge. Id. at *1.

Magistrate Judge Counts began her discussion with the crime-fraud exception, which Plaintiffs claimed compelled disclosure of the withheld material. Id. at *2. She stated that the crime-fraud exception applies to the work product doctrine and assured that the “seal of secrecy between lawyer and client does not extend to communications made for the purpose of getting advice for the commission of a fraud or crime.” Id. (internal citations omitted). Parties seeking disclosure under the crime-fraud exception must make a threshold showing of a factual basis adequate to support a good-faith belief by a reasonable person that the party asserting the privilege was engaged in intentional fraud and communicated with counsel in furtherance of the fraud at the time the party was engaged in or planning the criminal or fraudulent scheme. Id. at *3. Upon a successful showing, the court has the discretion to engage in an in camera review with the available evidence to determine whether the crime-fraud exception applies.

Plaintiffs argued that deposition testimony showed that Defendant’s agent accessed Plaintiffs’ servers and downloaded software code and other material and were directed to do this by Defendant. Magistrate Judge Counts cast doubt on Plaintiffs’ interpretation of this testimony and noted that Defendant cited to various evidence showing that Defendant “had authorization and/or reasonable grounds to believe it had authorization to access the Software because it either owns it or has an implied non-exclusive license to the Software.”

Magistrate Judge Counts found that Plaintiffs’ assertions did not provide an adequate factual basis for the threshold showing under the crime-fraud exception as they “amount[ed] to mere conjecture.” She added that there was no other evidence that the communications were made in furtherance of a crime or fraud, and Plaintiffs merely offered their general theory that a fraud occurred and asserted that any communications made aided that fraud. This did not satisfy the requirements for the crime-fraud exception or justify in camera review.

Magistrate Judge Counts used as an example an email Plaintiffs argued confirmed that Defendants communicated with counsel in furtherance of maintaining software they knew was stolen. Id. at *4. She stated that the email, which was only three sentences long, was “clearly part of an ongoing discussion” and did “not provide any information as to the specific subject.” Magistrate Judge Counts noted that the email was dated a month after the emails Plaintiffs were requesting, causing her to reject the suggestion that Defendants waived the attorney-client privilege for other communications by disclosing it to a third party.

Magistrate Judge Counts continued that there were also open fact issues as to whether Defendant owned the software at issue. She stated that Missouri’s Computer Tampering Act provided the elements needed to show that a crime or fraud was being undertaken, and per the statute, the “computer tampering must be done ‘without authorization or without reasonable grounds to believe that he has such authorization.’” Id. (quoting Mo.Rev. Stat. § 569.095 (2017)). Magistrate Judge Counts added that common law fraud also required a specific intent to provide a false representation. Id. at *4. Magistrate Judge Counts concluded that Defendant’s belief that it owned the software in question negated the crime-fraud exception, and denied this part of Plaintiffs’ motion to compel. Id. at *5.

2. An order from the U.S. District Court for the Northern District of Indiana adopting a magistrate judge’s recommendation granting a provisional award of fees and costs based on the finding that the defendant’s opposition to the compelled discovery was not substantially justified under Federal Rule of Civil Procedure 37.

In Axis Ins. Co. v. American Specialty Ins. & Risk Servs., Inc., 2021 WL 6012709 (N.D. Ind. December 6, 2021), U.S. District Judge Damon R. Leichty adopted a recommendation by a magistrate judge (previously reported in the August 2021 edition of this publication) compelling discovery and granting a provisional award of fees and costs based on the finding that the Defendant’s opposition to the compelled discovery was not substantially justified under Federal Rule of Civil Procedure 37.

Plaintiff brought this matter asserting a single claim for breach of contract with respect to its agreement with Defendant to promote, underwrite, bind, and deliver its insurance policies to customers. See Axis Ins. Co. v. American Specialty Ins. & Risk Servs., Inc., 2021 WL 2910814, at *1 (N.D. Ind. July 12, 2021). During discovery, Plaintiff claimed that Defendant’s responses omitted or included incorrect metadata, including missing “family” data and emails with altered subject lines and message content, and that responsive documents were omitted.

After unsuccessful attempts to meet and confer, Plaintiff had filed a motion to compel Defendant to produce all missing documents and to correct various metadata issues and also sought expenses in connection with the motion. Id. at *2. The magistrate had granted the motion to compel production of missing documents and to correct metadata and had also provisionally granted the fee request. Id. at *10.

In objecting to the magistrate’s recommendation, Defendant challenged only the ruling provisionally awarding fees. 2021 WL 6012709, at *1. Judge Leichty noted that the magistrate had used the appropriate standard, under which “a court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion ... to pay the movant’s reasonable expenses incurred in making the motion, including attorney’s fees,” unless “(i) the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action; (ii) the opposing party’s nondisclosure, response, or objection was substantially justified; or (iii) other circumstances make an award of expenses unjust.” Id. (quoting Rule 37(a)(5)(A)). An objection is substantially justified “if reasonable people could differ as to the appropriateness of the contested action.” Id. (internal citations omitted).

Turning to the substance of the magistrate’s opinion, Judge Leichty first found that Defendant failed to show clear error in the magistrate’s findings. He noted that Defendant’s objections to the original requests were “largely undeveloped” and inconsistent and that Plaintiff had raised legitimate concerns regarding the completeness of Defendant’s production. Judge Leichty also noted that Defendant raised many of the same arguments it had made to the magistrate, each of which had been addressed and rejected. In short, Defendant did not show that the magistrate’s findings were “dead wrong.” Id. at *2 (quoting Parts and Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 288, 233 (7th Cir. 1988)).

Judge Leichty next addressed Defendant’s argument that some of Plaintiff’s discovery requests included contention-based document requests. He explained that such requests can be inappropriate if they invade counsel’s mental impressions or require counsel to cull and compile documents in a way that exposes legal strategies and deliberative choices about the importance of certain documents to specific claims, defenses, or other contentions in the case. However, he found that the magistrate had committed no error in compelling the discovery because although Defendant had made a general work product objection, it had also agreed to produce responsive documents but had failed to do so. Id. at *3.

Judge Leichty next addressed Defendant’s arguments about its failure to produce metadata. Defendant had initially objected to the requested metadata fields, saying the parties had not agreed to an electronically stored information (ESI) protocol, but the magistrate rejected this argument, and Judge Leichty agreed. Defendant had argued that the objection requirement of Rule 34(b)(2)(C) did not apply to ESI production requests but had cited no authority for that proposition, which in any event was inconsistent with the rule’s language. As Judge Leichty noted, a party’s option to comply with Rule 34(b)(2)(D) (which permits a party to object to a requested form for producing ESI) does not obviate the need to comply with Rule 34(b)(2)(C). He found that Defendant’s position was not substantially justified, and therefore it did not show clear error on this issue.

Defendant raised additional arguments related to the discovery requests that were compelled by the magistrate, but Judge Leichty rejected these arguments because they did not relate to the basis for the provisional fee award or were related to objections that had not been made to the underlying discovery requests and were therefore waived.

3. A decision from the U.S. District Court for the Western District of Pennsylvania denying a motion to recuse based on metadata properties within the court’s orders suggesting that a special master authored some of the court’s opinions in the case, including an opinion adopting the special master’s report and recommendation, which the plaintiff claimed created the appearance of impropriety.

In Arconic Corp. v. Novelis Inc., 2022 WL 409488 (W.D. Pa. Feb. 10, 2022), Senior U.S. District Judge Joy Flowers Conti rejected a Plaintiff’s motion seeking her recusal on the grounds that metadata properties within her court orders suggested that the special master was the “author” of some of the court’s opinions in the case, which the Plaintiff claimed created the appearance of impropriety.

In this action alleging theft of trade secrets and confidential information, the court had appointed a special master early in the proceedings in light of the “complicated and contentious” nature of the litigation. Id. at *1. The court later issued an opinion and order under Rule 56(f) that Plaintiff show cause why summary judgment should not be entered on the trade secret and confidential information claims, and the special master issued a long report and recommendation (R&R). Id. at *2. A law clerk emailed the opinion to the parties’ counsel to give them an opportunity to suggest removal of sensitive corporate information. The system metadata in the attachment to this email identified the special master’s staff as the author of the opinion, the “date created” as several months prior, and the “last modified” date as the date of the email to counsel. The court issued a summary judgment opinion the following week concluding that Plaintiff had not properly identified any trade secrets and identified only seven items of confidential information.

Over a year after the court issued its summary judgment opinion, Plaintiff filed a motion to recuse Senior Judge Conti, which she described as “an assertion that the court abandoned its duty to conduct an independent, de novo review of the special master’s R&Rs by having the special master’s staff ghost-write the court’s decisions.” Id. at *3. She noted that the only evidence supporting Plaintiff’s claim was the author and created-date fields of the metadata of certain decisions.

Senior Judge Conti first stated the test for recusal as whether a “reasonable person, with knowledge of all the facts, would conclude that the judge’s impartiality might reasonably be questioned.” Id. (quoting In re Kensington Int’l Ltd., 368 F.3d 289, 301 (3d Cir. 2004)). She continued that extrajudicial bias referred to a “bias that is not derived from the evidence or conduct of the parties that the judge observes in the course of proceedings.” Id. at *4 (quoting Johnson v. Trueblood, 629 F.2d 287, 291 (3d Cir. 1980)). In the absence of proof that a person would reasonably question the judge’s impartiality, a judge has an affirmative duty not to recuse herself, noting that recusal motions can serve as a calculated tactical tool used by unscrupulous advocates to avoid unwanted results. Id. at *4. Finally, Senior Judge Conti stated that recusal motions must be sought in a timely manner and that a judge need not explain how she performed her duties or the mental processes used in formulating official judgments.

Senior Judge Conti then explained why Plaintiff’s arguments based on the author field of metadata were wrong and its speculation that the special master played an improper role in the court’s decisions was “entirely unfounded.” Id. at *5. She explained that the author field of the metadata was not evidence of who prepared the document and did not support a reasonable inference that the court abandoned its role or provide a basis for recusal. Instead, the author field was part of the “system metadata,” which is used by a computer’s file management system to “track file locations and information about a file’s name, size, creation, modification, and usage.” Senior Judge Conti stated that when creating documents in Microsoft Word, the user name entered on the File > Options > General tab is automatically added as the “author” in the metadata. The “author” field is not authenticated and will continue to reflect the name of the person who originally created the document used as the template but can be modified. Users can remove the original author name in the metadata by opening the document, accessing the File > Info, right-clicking on the author field of the metadata, and selecting “Remove Person.” Senior Judge Conti stated that the court did not take these steps to alter or remove the author field of the metadata of the documents at issue.

Senior Judge Conti explained that the court followed its typical procedure of using a document that had already been docketed as a template for its opinion as a matter of promoting efficiency. She stated that in using a prior document as a template, the metadata from the first document is not overwritten, and therefore the author metadata from the original document carried over into its opinion. She further explained that the “metadata pointed to by [Plaintiff] about the ‘author’ in the court’s opinions and orders at issue is superficial and has no relationship to the contents of the final product.” Senior Judge Conti noted in particular that in some cases, where the court adopted R&Rs issued by the special master in which the court used the “save as” command and filed the same order as the special master, changing only the date and signature lines. Id. at *6. In those cases, the author field in the metadata of the court’s order reflected the name of the special master’s staff. She also stated that at some point, the court used a document originally created by the special master’s staff as a template for court opinions in this case, thereby causing all intervening opinions or orders to inherit that metadata.

Senior Judge Conti explained that the author field of the metadata was not a smoking gun or a reasonable or reliable way to determine who is responsible for the content of a document. She stated that in preparing this particular opinion, the court reviewed the “Guidelines for Editing Metadata” released by the Administrative Office of the United States Courts, which suggested either starting orders or opinions with a fresh document or proactively changing the author metadata field. Judge Conti stated that the court would follow these suggestions going forward to avoid the concerns raised by Plaintiff.

Senior Judge Conti next discussed the “created” date in the metadata. She stated that unlike with the author field, using the “save as” command in Word to create a template automatically changes the created-date field of the document’s metadata. She further explained that the “created” date field reflects, rather than when the file was created, when the file came to exist on a particular storage medium, such as a hard drive. In the context of using a file as a template for a new document, the “created” field will reflect the date of the “save as” copying, not the date the file originally came into existence.

Plaintiff argued that the “created” date in the metadata of the court’s summary judgment opinion attached to the email to counsel dated months later implied that the special master or her staff was working on that opinion. Id. at *7. Senior Judge Conti denied this inference and noted this date merely reflects that the court began working on a draft opinion before the briefing was completed, and the date changed automatically when the Word document was first created from a template document.

Senior Judge Conti stated that Plaintiff’s “motion for recusal based on hidden fields of system metadata is not reasonable in light of the visible content of the court’s written decisions.” She continued that “[i]t is readily apparent that the court performed an independent review of the special master’s R&Rs and that the decisions at issue are the work of the court.” She further stated that in several of the opinions at issue, the court “expressly discussed the de novo standard of review being applied by the court,” and therefore it was “readily apparent on the face of the documents at issue that the opinions and orders are those of the court, acting independently of the special master.” Id. at *8. Senior Judge Conti therefore denied Plaintiff’s motion for recusal.

4. An opinion from the U.S. District Court for the District of Columbia sustaining an objection to a magistrate judge’s recommendation determining that private social communications were not in “electronic storage” and therefore could be produced under the Stored Communications Act.

In Republic of the Gambia v. Facebook, Inc., 2021 WL 5758877 (D.D.C. Dec. 3, 2021), U.S. District Judge James E. Boasberg sustained an objection by Facebook to a magistrate judge’s order (previously reported in the October 2021 edition of this publication) determining that private communications are not in “electronic storage.”

In this litigation, the Republic of the Gambia (The Gambia) applied pursuant to 28 U.S.C. § 1782 for production of content deleted by Facebook for use in its litigation against the Republic of the Union of Myanmar (Myanmar) at the International Court of Justice. See Republic of the Gambia v. Facebook, Inc., 2021 WL 4304851, at *1 (D.D.C. Sep. 22, 2021). The Gambia sought accounts and other content used by Myanmar government agents that sparked the genocide of the Rohingya, a religious minority in Myanmar. The United Nations Human Rights Council (U.N. Mission) found that Myanmar government officials relied on Facebook to credibly spread fake news to develop a negative perception of Muslims in Myanmar as early as 2012. Id. at *2. Facebook began deleting and banning accounts of key individuals and organizations in Myanmar in August 2018 but preserved copies of the content it deleted.

At issue in The Gambia’s application were The Gambia’s three document requests in connection with this deleted content: (1) public and private communications associated with the deleted content; (2) documents associated with Facebook’s internal investigation on how it identified the content deleted; and (3) a Rule 30(b)(6) deposition regarding all of the above. Id. at *4. Facebook argued that The Gambia’s requests (1) violated the Stored Communications Act (SCA) and (2) were unduly burdensome. Id. at *1.

After a briefing and a six-hour hearing, the magistrate had granted in part and denied in part The Gambia’s motion, rejecting Facebook’s arguments that the SCA, 18 U.S.C. § 2701, et seq., prohibited it from releasing much of the requested content. The magistrate also ordered Facebook to produce any nonprivileged documentation relating to its internal investigation. 2021 WL 5758877, at *2. Although Facebook agreed to produce public postings — for example, postings that anyone on Facebook can view — and associated metadata, Facebook challenged the magistrate’s conclusion that private pages and communications — for example, direct messages between users — may be disclosed to The Gambia pursuant to a § 1782 subpoena. In particular, Facebook argued that the SCA prohibited disclosure of the deleted private pages and communications stored on its servers. Id. at *3.

Judge Boasberg began his analysis with an overview of the SCA as it applied to Facebook’s challenge, noting that the SCA “creates a set of Fourth Amendment–like protections by statute, regulating the relationship between government investigators and service providers in possession of users’ private information.” Its protections apply to content held by providers of an “electronic communication service” (ECS), defined as “any service which provides to users thereof the ability to send or receive wire or electronic communications,” as well as providers of a “remote computing service” (RCS), which “means the provision to the public of computer storage or processing services by means of an electronic communications system.” Id. (quoting 18 U.S.C. §§ 2510(15) and 2711(2)).

Under the SCA, ECS providers may not disclose any communication held “in electronic storage,” which includes “any temporary, intermediate storage of a wire or electronic communication” or “any storage of such communication by an electronic communication service for purposes of backup protection.” Id. (quoting 18 U.S.C. § 2510(17)). RCS providers may not divulge communications maintained on their service “on behalf of ... a subscriber or customer ... solely for the purpose of providing storage or computer processing services to such subscriber or customer, if the provider is not authorized to access the contents” for any other purpose. Id. (quoting 18 U.S.C.§ 2702(a)(2)(A)–(B)).

Judge Boasberg noted that the parties agreed both that Facebook is an ECS with respect to the content at issue and that this content does not fall within the “temporary storage” category of “electronic storage” as those terms are used in the SCA. Accordingly, the dispute centered on whether the deleted private pages and communications were stored “for purposes of backup protection.” Id. (citing 18 U.S.C. § 2510(17)).

To answer this question, Judge Boasberg noted that “the most relevant definition of ‘backup’ is ‘a copy of computer data’” or “a reserve or substitute.” Id. at *4 (emphasis in original). “Protection” is “the act of protecting,” which is defined, in turn, as “keeping from being damaged, attacked, stolen, or injured.” He explained that a communication is stored “for purposes of backup protection,” then, when it is a “copy” or “reserve” held to prevent it being “damaged” or lost. Id. (quoting Hately v. Watts, 917 F.3d 770, 791 (4th Cir. 2019)).

With these definitions in mind, Judge Boasberg found that copies of the deleted private accounts and pages at issue, and the communications associated with them, fell within the SCA because Facebook preserved data, including content, on the accounts and pages it deleted. “Facebook stored a duplicate of these communications, among other reasons, in case it was lawfully called upon to produce them by an international body like the United Nations after their removal.” He found that these duplicates were a “copy” or “reserve” because they “exist on the same servers, in the same place, in the same format, in exactly the same manner” as they did before the accounts and pages were removed and therefore “literally fall[] within the statutory definition” of “for purposes of backup protection.” Id. (citing Theofel v. Farey-Jones, 359 F.3d 1066, 1075 (9th Cir. 2004)).

In reaching this conclusion, Judge Boasberg rejected The Gambia’s argument that the common understanding of “backup” requires the existence of an original. He noted that the dictionary definitions of “backup” do not require an original to exist and, in fact, contemplates loss of any “original.” He also noted that the SCA imposes no requirement that there be an original copy of the communication in order for other material to qualify as backup. Id. (citing 18 U.S.C. § 2510(17)(B)). Judge Boasberg also found that his reading of “backup purposes” comported with the SCA’s legislative context, which included that “Congress wanted to protect electronic communications that are configured to be private, such as email and private electronic bulletin boards,” to avoid hindering the adoption of new communications technologies. Id. at *5 (quoting Konop v. Hawaiian Airlines, Inc., 302 F.3d 868, 875 (9th Cir. 2002)).