February Edition of Notable Cases and Events in E-Discovery

E-Discovery Update

This update addresses the following recent developments and court decisions involving e-discovery issues:

  1. The Northern District of Indiana decision in the Biomet matter finding the court lacked the authority to compel the defendant to identify the documents used to refine the predictive coding algorithm but also urging the defendant to “re-think its refusal”;
  2. A Southern District of New York decision that the attorney-client privilege protected the name and contents of certain data fields in a company’s human resources databases because the company used the databases to share confidential information with in-house lawyers to assess the legal risks of employee compensation decisions;
  3. A Southern District of Ohio order that the process used to search for responsive ESI was discoverable so long as the inquiry was reasonable in light of the history of the case; and
  4. A Western District of New York decision denying a request for disclosure of a Facebook “friends” list.

1. In In re Biomet M2a Magnum Hip Implant Products Liability Litigation, 2013 WL 6405156 (N.D. Ind. Aug. 21, 2013), U.S. District Judge Robert L. Miller held that the court had no power to compel the defendant Biomet to identify which documents were used to refine the algorithm for predictive coding but urged Biomet to “re-think its refusal.”

Biomet used keywords and de-duplication to narrow the universe of 19.5 million documents to a more manageable 2.9 million documents and then used predictive coding to further narrow the set of documents produced. In April 2013, the court had ruled that Biomet did not have to undertake the predictive coding exercise with the larger 19.3 million document universe. In re Biomet M2a Magnum Hip Implant Products Liability Litigation, 2013 WL 1729682 (N. D. Ind. Apr. 18, 2013) [see June 2013 EDTF Case Notes].

In the present dispute, the Plaintiff Steering Committee (“PSC”) requested production of the discoverable documents used to train the predictive coding algorithm. Biomet, 2013 WL 6405156, at *1. As stated by the court, a predictive coding program identifies a representative document, and the user tells the program to find more documents similar to the representative document or to not find more documents similar to the representative document. Id. As a result of this process, the algorithm is refined, and the set of produced documents narrowed. The PSC sought discovery of the set of documents used to refine the algorithm, but Biomet claimed it was under no obligation to identify those documents.

The district court agreed with Biomet’s interpretation of Rule 26. First, the court noted that the PSC had no right to the documents determined to be irrelevant or privileged. A request for all documents used in the process, including the ones that were irrelevant, “reaches well beyond the scope of any permissible discovery by seeking irrelevant or privileged documents used to tell the algorithm what not to find. That the Steering Committee has no right to discover irrelevant or privileged documents seems self-evident.” Id. Thus, the court found that the Steering Committee could not receive the entire set of documents used to refine the algorithm.

Second, the court found that Fed. R. Civ. P. 26 does not require identification of the documents used to refine the algorithm even if they were found to be responsive. Biomet stated that those responsive documents had been produced, though it would not specifically identify them. “The Steering Committee wants to know, not whether a document exists or where it is, but rather how Biomet used certain documents before disclosing them. Rule 26(b)(1) doesn’t make such information disclosable.” Id. at *2.

The PSC argued that the Sedona Conference Cooperation Proclamation encourages cooperation in matters of electronic discovery. Id. at *2 (citing 10 Sedona Conf. J. 331 (Fall Supp. 2009)). The court acknowledged the Sedona Conference’s position, as well as the Seventh Circuit e-discovery program, but stated that such a stance did not expand the court’s powers to compel disclosure. Biomet, 2013 WL 6405156, at *2. Id.

The court ruled it had no power to compel the identification of the documents used to refine the algorithm. Having said that, the court found Biomet’s position “troubling,” acknowledging Biomet’s right not to provide the seed set but also finding that the PSC “is right that Biomet’s cooperation falls below what the Sedona Conference endorses.” Id. The court concluded that Biomet’s “unexplained lack of cooperation in discovery can lead a court to question why the uncooperative party is hiding something, and such questions can affect the exercise of discretion.” Id. Though it found it had no discretion, the court urged Biomet to “re-think its refusal.” Id.

2. In Chen-Oster v. Goldman Sachs & Co., 2013 WL 3009489 (S.D.N.Y. June 18, 2013), Magistrate Judge James Francis IV held that the attorney-client privilege protected the name and contents of certain data fields in Goldman Sach’s human resources databases because Goldman used the fields to share confidential information with in-house lawyers to assess the legal risks of employee-compensation decisions.

A lawsuit claimed that Goldman discriminated against female employees in violation of the Civil Rights Act’s Title VII. The employees sought discovery from Goldman’s human resources databases, and Goldman produced “the names of thousands of data ‘fields,’ each of which refer[red] to a category of data” available in the databases. Id. at*1. Some of those fields were “Diversity Objects” fields, which included information that Goldman’s counsel requested to help identify “legal risks that might be posed by the tentative compensation decisions that the managers within [Goldman’s revenue divisions] had proposed.” Id. at *2. After the production, Goldman’s counsel said that disclosure of the Discovery Objects fields had been inadvertent and that the work-product doctrine and attorney-client privilege protected those fields’ names and the “information that populate[d]” those fields. Id.

The Magistrate Judge held that the work-product doctrine protected neither the field names nor the data that the fields contained. The work-product doctrine protects materials prepared “in anticipation of litigation,” which means there must have been “at minimum an identifiable potential adversary and a defined legal claim” when the material was prepared. Id. at *3. In this case, Goldman failed to identify any such litigation threat, and for that reason, the Magistrate Judge concluded that the work-product doctrine did not apply.

The Magistrate Judge then addressed whether the attorney-client privilege protected the Diversity Objects field’s names and contents. The privilege protects (1) client-counsel “communications” that (2) are “confidential,” and that (3) are “made for the purpose of obtaining legal advice.” Id. at *4.

According to the Magistrate Judge, the field’s contents and names were both “communications.” Id. at *5. Regarding the contents, the Magistrate Judge explained that, when Goldman employees “populate[] the database with information in the Diversity Objects fields, [the employees] are taking the initial step in communicating that information to [Goldman’s] counsel,” who use that information to evaluate legal risks. Id. Regarding the names, the Magistrate Judge explained that the names were “organizational principles” that Goldman “use[d] to sort and package the information provided to the attorneys.” Id.

The Magistrate Judge rejected the plaintiffs’ argument that the fields’ names and contents were “facts” (which are not privileged) rather than “communications.” Id. The Magistrate Judge explained that the “facts” here were the “attributes of Goldman Sachs employees”; the names and contents of the Diversity Objects fields were communications about those facts. Id. Thus, the Magistrate Judge held that the fields satisfied the first leg of the attorney-client privilege standard.

The Magistrate Judge also held that the fields’ contents and names were “confidential” and related to communications made for the purpose of obtaining legal advice. Id. at *6. The Magistrate Judge relied on a Goldman employee’s sworn testimony that Goldman did not share the Diversity Objects fields outside the legal group and the team compiling the relevant data and used the “information from the Diversity Objects fields exclusively to provide legal advice.” Id. at *6. Thus, the Magistrate Judge concluded that the Diversity Objects fields satisfied all the criteria for attorney-client privilege protection.

The plaintiffs argued that Goldman nonetheless waived the privilege. Id. at *6. A defendant may waive the attorney-client privilege when the defendant “asserts a [defense] that in fairness requires examination of the protected communications.” Id. (quotation marks omitted). In this case, Goldman had asserted that it was unaware of any employee’s discriminatory conduct towards the plaintiffs. Id. at *7. That defense, the plaintiffs argued, required examination of the Diversity Objects fields’ data to determine whether the data in fact included information about discrimination. Id. The Magistrate Judge held, however, that Goldman’s knowledge of discrimination was irrelevant to the plaintiffs’ discrimination claim because the claim had no mens rea element. Id. Thus, the Magistrate Judge held that Goldman had not waived the attorney-client privilege over the Diversity Objects fields’ names or contents.

3. In Ruiz-Bueno v. Scott, 2013 WL 6055402 (S.D. Oh. Nov. 15, 2013), Magistrate Judge Terence P. Kemp held that the process used to search for responsive ESI was discoverable so long as the inquiry was reasonable in light of the history of the case.

The plaintiff brought a wrongful death case against defendants and, as lamented by the Magistrate Judge, counsel for the parties did not act cooperatively in the discovery process. Defendants did not inform plaintiff about the process used to collect documents or their attempts to comply with requests. Thus, the plaintiff requested an explanation from defendants of the efforts to comply with plaintiff’s prior discovery requests and a description of the procedures and methods used to search for responsive ESI. The defendants opposed the request as irrelevant and not discoverable.

The Magistrate Judge held that the Federal Rules of Civil Procedure permit discovery about the discovery process. Rule 26(b)(1), the Magistrate Judge noted, states that “information about ‘the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity or location of persons who know of any discoverable matter’ is within the proper scope of discovery.” Id. at *1 (quoting Fed. R. Civ. P. 26(b)(1)). The Magistrate Judge thus found that discovery about the discovery process was permissible, even though such information may not be directly relevant to a party’s claim or defense, and cited to case law reaching the same conclusion. Id. at 2 (citing, Strauss v. Credit Lyonnais, S.A., 242 F.R.D. 199, 232 (E.D.N.Y. 2007)). The Magistrate Judge concluded that “neither Rule 26(b)(l) nor the applicable case law supports an absolute ban against the type of inquiries made in plaintiffs’ second set of interrogatories.” Id.

He then considered if the requests at issue were reasonable in the context of this case and found them so. Magistrate Judge Kemp concluded that none of the documents produced had been properly sworn to or authenticated, and defendants did not at any point describe their attempts to comply with discovery requests. Id. at *3. He explained that such issues relating to electronic discovery should have been discussed as part of the Rule 26(f) planning process. While not every case requires “‘discovery about discovery,’” the Magistrate Judge stated, “such an order is needed in this case,” and granted the plaintiff’s motion to compel. Id. at *4.

4. In In re Air Crash Near Clarence Center, New York, 2013 WL 6073635 (W.D.N.Y. Nov. 18, 2013), Chief Judge William M. Skretny issued an order denying a request for disclosure of a Facebook “friends” list.

On February 12, 2009, Continental Connection Flight 3407 crashed while on final approach to Buffalo Niagara International Airport, killing everybody on board. Id. at *1. On October 6, 2009, the United States Judicial Panel on Multidistrict Litigation, pursuant to 28 U.S.C. § 1407, transferred all then-pending actions concerning the plane crash to the Western District of New York for coordinated and consolidated pretrial proceedings. Id. One such action was brought by the plaintiff, whose husband was killed in the crash. Id. In addition to the plaintiff, the decedent was survived by his son, who suffered from Asperger’s Disorder. Id. Among other things, the plaintiff brought claims for loss of support, future financial assistance, and inheritance arising from the plane crash. Id.

The parties disputed the scope of permissible discovery, resulting in the defendants bringing a motion to compel the production of “complete and proper” responses to the defendants’ requests for production and interrogatories, including requests for the decedent’s credit card and bank account information and valuation records for decedent’s property. Id. The plaintiff had produced 2000 pages of the son’s Facebook account but balked at production of the son’s Facebook friend list, which defendants were seeking to demonstrate his ability to socialize and communicate with others. The plaintiffs also refused to provide records of psychological testing of the son by the plaintiff’s experts. Id. at *5.

The court explained that “[d]iscovery in federal court is broad and permissive.” Id. at *1. Indeed, Rule 26(b)(1) provides that parties “may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense” so long as the discovery request is “reasonably calculated to lead to the discovery of admissible evidence.” Id. (citations omitted) (emphasis in original). The court described this standard as “necessarily broad in scope in order to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Id. at *2 (internal quotations and citations omitted). This “permissive standard is not unfettered,” however, and courts must ensure that the discovery sought is not “unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive.” Id. (internal quotations and citation omitted). The court also noted that two prior decisions in the MDL provided guidance on the resolution of the disputed issues.

Applying these standards, the court concluded that defendants were entitled to the credit card, bank account, and property valuation materials. The court ruled, however, that the son’s Facebook “friend list” was not discoverable. Judge Skretny noted “the ease with which ‘friends’ can be collected on Facebook – indeed, one can be ‘friends’ with people known to them, with strangers, with celebrities, with animals, and even with inanimate objects.” Id. at *5. He found “little likelihood of a correlation between the number of one’s virtual Facebook friends and one’s ability to socialize and communicate in the real world,” and determined that the production of the son’s Facebook account materials was sufficient to allow an assessment of the son’s Asperger’s Disorder, subject to the supplemental disclosure requirements of Rule 26(e)(1). Id.

With respect to the psychological testing of the son performed by the plaintiff’s experts, the court ruled that such tests were discoverable under Rule 26(a)(2) and that the plaintiff had “expressed a willingness to produce the expert testing materials underlying her experts’ opinions.” Id. (citations omitted).

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The E-Discovery Task Force of Sidley Austin LLP

The legal framework in litigation for addressing the explosion in electronic communications has been in flux for a number of years. Sidley Austin LLP has established an “E-Discovery Task Force” to stay abreast of and advise clients on this shifting legal landscape. An inter-disciplinary group of more than 25 lawyers across all our domestic offices, the Task Force monitors and examines issues and developments in the law regarding electronic discovery. The Task Force works seamlessly with our firm’s Litigators who regularly defend and prosecute all types of litigation matters in trial and appellate courts, federal and state agencies, arbitrations, and mediations throughout the country. The co-chairs of the E-Discovery Task Force are: Alan C. Geolot (+1 202.736.8250, ageolot@sidley.com), Colleen M. Kenney (+1 312.853.4166, ckenney@sidley.com), and Jeffrey C. Sharer (+1 312.853.7028, jsharer@sidley.com).

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