Catagory:Case Summaries

Peskoff v. Faber, 244 F.R.D. 54 (D.D.C. 2007)

In this opinion, United States Magistrate Judge John M. Facciola continued attempts to resolve ongoing discovery issues in Plaintiff Jonathan Peskoff’s suit to recover damages for financial injury resulting from Defendant Michael Faber’s operation of a venture capital fund, called NextPoint Partners, LP.  Peskoff and Faber were managing members of NextPoint GP, LLC ("NextPoint "), the general partner of the venture capital fund.  Peskoff left NextPoint in January 2004 and filed an action against Faber shortly after.

In discovery, Peskoff sought documents, including email from his time at NextPoint Management. Faber’s initial productions of email and other documents did not include any emails that Peskoff received or authored between mid-2001 and mid-2003.  In a previous ruling centering on the missing data, the court noted that the unresolved issue was whether such emails still existed and could be located, and whether the efforts made to date to locate them had been adequate.  The court had ordered the Defendant to conduct additional searches for any email involving Peskoff, and to submit a sworn statement and provide testimony at an evidentiary hearing on the nature and adequacy of such searches.  (For additional background information, click on the links to see summaries of two previous orders in this case related to this issue, entered July 2006 and February 2007).

In this opinion, the court noted that Faber had failed to appear at the subsequent evidentiary hearing, and that this failure to comply with the court’s previous order would be construed against him.  The court then relied on the testimony made by others at the hearing, and on other available information, and concluded that the production to date raised many questions regarding its completion and the sufficiency of the searches performed.  The court also concluded that any additional searches would require additional resources beyond the tools available to NextPoint.

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Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B (BLM), United States District Court for the Southern District of California

The lawyers who represented Qualcomm in this unsuccessful patent litigation, who on August 13, 2007 were ordered to appear today to show cause (“OSC”) why sanctions should not be imposed against them for failure to comply with the Court’s orders, will not be appearing in court today after all.  Magistrate Judge Barbara Lynn Major has granted the lawyers’ applications to extend the August 22, 2007 filing date for declarations regarding the imposition of sanctions and the August 29, 2007 OSC hearing date.  In their applications, the lawyers acknowledged that the “OSC raises complex and very serious issues that potentially impact the legal careers of the lawyers who are the subject of the OSC,” and explained that additional time was needed to get the lawyers’ newly-hired attorneys up to speed on the record and the issues, and adequately prepare for the OSC.  Finding that good cause was shown, the Court granted the applications and extended the deadline for filing declarations to Friday, September 21, 2007, and moved the hearing date to Friday, October 12, 2007 at 9:30 a.m.

In related rulings, Magistrate Judge Major agreed to allow the lawyers to be represented by their own counsel for purposes of responding to the OSC.  The HellerErhman lawyers will be represented by Kirby Noonan Lance & Hoge LLP of San Diego, and the lawyers from Day Casebeer Madrid & Batchelder will be represented by Shartsis Friese LLP of San Francisco. 

As noted in our August 13, 2007 post, the Order to Show Cause was issued days after District Court Judge Rudi M. Brewster entered a 54-page Order on Remedy for Finding of Waiver.  There, the District Judge found “by clear and convincing evidence that Qualcomm[’s] counsel participated in an organized program of litigation misconduct and concealment throughout discovery, trial, and post-trial before new counsel took over lead role in the case on April 27, 2007.”  Among other things, the Court highlighted Qualcomm’s production of over 200,000 pages of highly relevant emails and electronic documents four months post-trial.

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Columbia Pictures, Inc. v. Bunnell, 245 F.R.D. 443 (C.D. Cal. 2007)

In this opinion, the district court denied defendants’ motion for review of a prior discovery order that required defendants to begin preserving and subsequently produce certain data held in the random access memory (RAM) of defendants’ computer servers.  The court noted that, at the heart of defendants’ motion for review was a question of first impression:  Is the information held in a computer’s random access memory (RAM) "electronically stored information" under Federal Rule of Civil Procedure 34?  The court concluded that it is: 

Defendants and amici seek to engraft on the definition of “stored” an additional requirement, that the information be not just stored, but stored “for later retrieval.”  They argue that “electronically stored information” cannot include information held in RAM because the period of storage, which may be as much as six hours, is too temporary.  The Court finds this interpretation of “stored” unsupported by the text of the Rule, the accompanying commentary of its drafters, or Ninth Circuit precedent involving RAM.  The Court holds that data stored in RAM, however temporarily, is electronically stored information subject to discovery under the circumstances of the instant case.

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Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey, 2007 WL 2085358 (E.D. Pa. July 20, 2007)

Healthcare Advocates was the plaintiff in an earlier lawsuit that asserted claims for trademark infringement and misappropriation of trade secrets against a competitor.  The Harding firm represented the defendants in that lawsuit, which was dismissed on summary judgment.  This civil action arose out of events that occurred in the pre-discovery phase of the underlying litigation.

After receiving the complaint, the Harding firm investigated the facts behind the allegations.  Employees of the Harding firm accessed a website operated by the Internet Archive (www.archive.org), and viewed archived screenshots of Healthcare Advocates’ website via a tool contained on Internet Archive’s website called the Wayback Machine.  The Wayback Machine allowed the Harding firm to see what Healthcare Advocates’ public website looked like prior to the date the complaint was filed in the underlying litigation.  Viewing the content that Healthcare Advocates had included on its public website in the past was very useful to the Harding firm in assessing the merits of the claims brought against their clients.  The Harding firm printed copies of each archived screenshot of Healthcare Advocates’ public website that they viewed via the Wayback Machine, and used the images used during the course of the underlying litigation.  However, the Harding firm did not actively save any of the screenshots they viewed onto their computer hard drives.

Healthcare Advocates later sued the Harding firm, claiming among other things that the firm had infringed on its copyright rights by viewing and printing copies of the archived images of the Healthcare Advocates’ web pages, by unknowingly saving copies of these web pages in temporary files known as caches, and by distributing the images to their co-counsel in the underlying litigation.  It further alleged that the Harding firm was guilty of “hacking.”

In this opinion, the court granted defendant’s motion for summary judgment, finding that the Harding firm’s infringing use was excusable under the fair use doctrine.  The court further rejected Healthcare Advocates’ request for spoliation sanctions based on defendant’s failure to preserve the temporary cache files.

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Doe v. Norwalk Community College, 2007 WL 2066497 (D. Conn. July 16, 2007)

In this case, plaintiff Jane Doe sued Norwalk Community College ("NCC") and Ronald Masi claiming she was sexually assaulted by Masi, a former professor at the college.  Doe filed her complaint in November 2004, and in March 2006, Doe moved to compel the inspection of certain electronic records possessed by NCC.  The court granted the motion in July 2006, and permitted plaintiff’s expert to inspect certain NCC computers.  Based upon her expert’s findings, Doe moved for sanctions, seeking an adverse inference with regard to electronic files which she claimed the defendants destroyed.

Specifically, Doe claimed that the hard drives of key witnesses had been scrubbed or completely wiped of data.  Further, her expert found inconsistencies in the mailboxes of four individuals that suggested to him that data had been altered, destroyed or filtered.  For example, one witness’s PST file contained no Deleted Items and only one Sent Item and the Inbox and Sent Items contained data starting August 2004, even though other activity was present starting in 2002.  In addition, Doe presented evidence that the retention policy issued by the State Library, which provided for a two-year retention with respect to electronic correspondence, governed NCC, and that this policy was not followed with respect to the hard drives of the computers of faculty members who left the college. Read More

Pipefitters Local No. 636 Pension Fund v. Mercer Human Res. Consulting, Inc., 2007 WL 2080365 (E.D. Mich. July 19, 2007)

In this brief order on plaintiffs’ objections to an amended scheduling order entered by the magistrate judge, the district court struck that portion of the amended scheduling order shifting the costs of electronic discovery to plaintiffs:

Without a motion pending, the Magistrate Judge ordered that plaintiffs would be required to pay for restoring electronic data, if such was sought by them from defendant.  Under the electronically stored information amendment to Fed.R.Civ.P. 26(b)(2)(B), the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost.  The court may order discovery if the requesting party shows good cause, but may specify conditions for the discovery.  Due to the lack of a record it is not apparent that the Magistrate Judge engaged in the proper analysis before shifting the cost of discovery to plaintiffs.

Plaintiffs’ motion to strike the Magistrate’s order as it pertains to the costs of electronically stored information is GRANTED.  If the same issue is raised by motion, the analysis set forth in Fed.R.Civ.P. 26(b)(2)(B) will control the outcome.

Kingsway Fin. Servs., Inc. v. Pricewaterhouse-Coopers LLP, 2007 WL 1837133 (S.D.N.Y. June 27, 2007)

In this securities case, the parties had entered into a protective order which provided, among other things, that the inadvertent production of purportedly privileged documents would not operate as a waiver of any applicable privilege.  In August 2006, plaintiff produced an April 25, 2003 email and attached memorandum sent from an executive of plaintiff Kingsway to Kingsway’s counsel as part of a production of electronic documents.  In November 2006, defendant John Dore attached a copy of the April 25, 2003 email to a motion for reconsideration of a decision denying summary judgment in a related action pending in Illinois state court.  Four days later, plaintiff submitted a letter to the District Court for the Southern District of New York requesting the return of all copies of the April 25, 2003 email on the ground that it was protected by the attorney-client privilege and had been produced inadvertently.  Plaintiff filed the December 4, 2006 letter to the court under seal.  However, plaintiff attached a copy of the April 25, 2003 email to the service copies of the December 4, 2006 letter, thereby disclosing the contents of the email and the attachment to the defendants once again.

The court thereafter directed all defendants, including Dore, to return all copies of the disputed email, to destroy any documents disclosing its contents, to use best efforts to retrieve any such documents filed with any court, and to make no use of the email pending further order of the court. Read More

United Med. Supply Co., Inc. v. United States, 77 Fed. Cl. 257 (2007)

In this decision, the United States Court of Federal Claims imposed sanctions against the United States based upon its “reckless disregard of its duty to preserve relevant evidence.”  The court opened its lengthy opinion and order with the following passage:

“One man’s trash is another man’s treasure.”

Aside perhaps from perjury, no act serves to threaten the integrity of the judicial process more than the spoliation of evidence.  Our adversarial process is designed to tolerate human failings – erring judges can be reversed, uncooperative counsel can be shepherded, and recalcitrant witnesses compelled to testify.  But, when critical documents go missing, judges and litigants alike descend into a world of ad hocery and half measures – and our civil justice system suffers.

To guard against this, each party in litigation is solemnly bound to preserve potentially relevant evidence.  In this government contract case, defendant violated that duty not once or twice—but repeatedly, over many years, and in sundry ways, leading to the destruction of many admittedly relevant documents.  Most disturbingly, some of these documents were destroyed even after the court conducted its first spoliation hearing.  While defendant apologizes profusely for what it claims is the “negligence” of some of its employees and for making repeated misstatements to the court as to the steps that were being taken to prevent spoliation, it, nonetheless, asseverates that the court should not—indeed, cannot—impose spoliation sanctions because defendant did not proceed in bad faith.  While defendant may be wrong in asserting that it acted in good faith, it most certainly is wrong in thinking that it can recklessly disregard its obligations to preserve evidence without legal consequence.

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Valdez v. Town of Brookhaven, 2007 WL 1988792 (E.D.N.Y. July 5, 2007)

In this discrimination case, the court decided a number of discovery issues, including plaintiffs’ request that the defendants be directed to send out a litigation hold to the relevant Town employees to preserve records.  Denying the request, the court provided a brief explanation:

[T]he plaintiffs request that the court direct defense counsel to send out a litigation hold to the relevant Town employees to preserve records as well as to conduct a good faith investigation into what documents (electronic or otherwise) may have already been destroyed.  The apparent basis for this request is a conversation during which defense counsel reportedly advised that the "Town has a history of terrible record keeping."  Defense counsel denies any such conversation occurred.  The law is clear that there is an obligation to preserve evidence "when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation", see Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 216 (S.D.N.Y. 2003) (citing Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 436 (2d Cir. 2001); Kronish v. United States, 150 F.3d 112, 126 (2d Cir. 1998)).  To the extent, however, plaintiffs seek a preservation order that request is denied.  Preservation orders are burdensome and expensive and in the absence of a clear need should not be lightly entered.  See, e.g., Treppel v. Biovail Corp., 233 F.R.D. 363, 370-71 (S.D.N.Y. 2006).