May's Notable Cases and Events in E-Discovery

1. In EEOC v. BDO USA, LLP, 876 F.3d 690 (5th Cir. Nov. 16, 2017), the Fifth Circuit overturned a lower court ruling that upheld defendant’s attorney-client privilege log claims and granted a protective order over communications involving company attorneys, finding that the lower court erred in concluding that all communications between a company’s employees and its counsel were per se privileged.

Hang Bower and the Equal Employment Opportunity Commission (EEOC) brought an action against defendant for gender discrimination, retaliation and hostile work environment. In her human resources (HR) position with defendant, Bower was responsible for investigating discrimination complaints and communicated with both in-house and outside counsel.

During discovery, the EEOC issued information requests and a subpoena seeking documents and information from defendant, which provided some, but not all, of the requested information and prepared a privilege log cataloging withheld documents as to which it asserted attorney-client privilege. Some of these privilege log entries included communications between (1) Bower and in-house and outside counsel, (2) other employees of defendant and in-house and outside counsel, (3) nonattorney employees with counsel courtesy copied and (4) nonattorney employees regarding legal advice (but not involving any attorneys). Id. at 694.

The EEOC objected to the log and sought to compel production of certain documents listed thereon. Defendant opposed the motion and also sought a protective order enjoining the EEOC from questioning Bower and defendant’s employees regarding their conversations with its counsel and requiring the EEOC to return or destroy evidence of witness interviews and other documents that memorialized the privileged conversations.

The magistrate judge who presided over the show-cause hearing on these issues rejected the EEOC’s contention that the communications defendant claimed were privileged were not protected and stated that “anything that comes out of [defendant] lawyer’s mouth is legal advice.”

The EEOC filed objections to the magistrate judge’s order with the district court, arguing that the decision was based “on incorrect interpretations of the facts and the applicable law.” Bower maintained that emails exchanged between her and other nonattorneys pertaining to these investigations were made for the primary purpose of conveying business directives or factual information. She further claimed that to protect communications from disclosure in future legal proceedings, defendant required her to forward to or courtesy copy in-house counsel on virtually all communications pertaining to employee investigations and to include in HR-related emails a false designation that the communication was prepared at the request of legal counsel. The district court summarily affirmed the magistrate judge’s order, and the EEOC appealed to the Fifth Circuit.

The Fifth Circuit considered two issues on appeal: (1) whether the question of defendant’s attorney-client privilege claims for the documents set forth on its privilege log should be remanded to the district court and (2) whether the protective order in favor of defendant should also be reversed and remanded. Id. at 695.

In considering the initial issue, the Fifth Circuit first examined the legal standard for a communication to qualify as subject to the attorney-client privilege, noting that the proponent must prove (1) that it made a confidential communication (2) to a lawyer or his subordinate (3) for the primary purpose of securing either a legal opinion or legal services, or assistance in some legal proceeding. Id. (citing United States v. Robinson, 121 F.3d 971, 974 (5th Cir. 1997)). The court also noted that because the attorney-client privilege “has the effect of withholding relevant information from the fact-finder,” it is interpreted narrowly so as to “appl[y] only where necessary to achieve its purpose.” Id. (citations omitted).

The Fifth Circuit applied this standard in examining the magistrate judge’s reasoning, specifically whether the magistrate judge erred in concluding that all communications between a corporation’s employees and its counsel were “per se privileged” and by inverting the burden of proof, requiring that the EEOC prove that defendant improperly asserted the attorney-client privilege as to the withheld documents. Id. at 696. The Fifth Circuit found that the magistrate judge’s reasoning ran “afoul of well-settled attorney client privilege principles” because there is no presumption that a company’s communications with counsel are privileged: “[A] confidential communication between client and counsel is privileged only if it is generated for the purpose of obtaining or providing legal assistance ... nor are documents sent from one corporate officer to another [privileged] merely because a copy is also sent to counsel.” Id. (citations omitted). Based on these findings, the Fifth Circuit concluded that the district court did err by inverting the burden of proof, in requiring that the EEOC prove that defendant improperly asserted the attorney-client privilege as to its withheld documents and in concluding that all communications between a company’s employees and its counsel were per se privileged. Accordingly, the Fifth Circuit vacated the district court’s judgment and remanded the case for a determination applying the correct attorney-client privilege principles and legal standards. Id. at 697.

The Fifth Circuit then turned to the question of whether the district court applied the correct legal standard when it granted defendant’s request for a protective order. The Fifth Circuit concluded that the magistrate judge applied the incorrect legal standard in its decision to grant the protective order because that order was based on the same legal error as the order denying the EEOC’s application for subpoena enforcement, which was “an ‘overly broad’ legal standard that wrongly swe[pt] under the umbrella of non-disclosure all communications involving an attorney.” Id. at 698. The Fifth Circuit did not hold that a protective order was unwarranted and left the decision whether to grant such an order to the trial court.

Ultimately, because the magistrate judge’s incorrect application of the legal standard may have affected both the analysis of the allegedly disclosed communications and the breadth of the protections imposed in the protective order, the Fifth Circuit vacated and remanded the order so that defendant’s request for protection could be considered under the proper legal standard for determining privilege.

2. In Sali v. Corona Regional Medical Center, 884 F.3d 1218 (9th Cir. March 19, 2018), the Ninth Circuit held that the district court could sanction counsel pursuant to Fed. R. Civ. P. 37 for failing to comply with an order to produce an expert witness for a deposition.

In this putative class action, various registered nurses filed suit against defendants, their former employer and its corporate parent, for alleged violations of wage and hour laws. Id. at 1220. Plaintiffs moved for class certifications with supporting declarations from their expert economist and statistician. Defendants sought to depose the experts in advance of the deadline for filing the opposition to class certification. After an unproductive email exchange, defendants subpoenaed the expert statistician to be deposed. Plaintiffs objected, and on the scheduled day of the deposition, neither the expert nor plaintiffs’ counsel appeared.

After defendants told plaintiffs they would move ex parte for sanctions and to compel the deposition, the parties met and conferred. Defendants agreed to pay the expert’s fee prior to the deposition, but the parties could not agree on a date. Defendants applied ex parte to compel the deposition on their preferred dates. The magistrate judge denied the request because defendants had inexcusably waited to arrange the depositions but ordered plaintiffs to produce the expert statistician on a date that plaintiffs’ counsel had indicated the expert would be available. Id. at 1220-21.

On the day of the rescheduled deposition, plaintiffs’ counsel and the expert again failed to appear, prompting defendants to move for sanctions under Rule 37. Id. at 1220. The magistrate judge found that plaintiffs were not substantially justified in disobeying the order to produce the expert and sanctioned plaintiffs’ counsel for $15,112 representing the costs associated with the deposition and motion for sanctions. Plaintiffs’ counsel refused to pay the sanctions and, after the district court entered a contempt judgment, plaintiffs and their counsel appealed.

On appeal, plaintiffs and their counsel argued that the district court lacked authority to compel the deposition of a nonparty under Rule 37(a) and impose sanctions under Rule 37(b).

Beginning with the general rules on depositions, Judge Jacqueline Nguyen noted that Rule 30 authorizes a party to take the deposition of “any person,” generally without court permission. Id. at 1222 (quoting Fed. R. Civ. P. 30(a)(1)). Rule 45 provides that a deponent’s attendance may be compelled by subpoena. If a party fails to comply, the court may hold the deponent in contempt. Fed. R. Civ. P. 45(g). While this procedure — subpoena, failure to appear, followed by contempt — is one method for ensuring deposition attendance, Judge Nguyen concluded that it is not the exclusive method.

In particular, Judge Nguyen held that Rule 37 authorizes the court to both compel a party to make its “best efforts” to secure the attendance of a nonparty at a deposition and sanction a party’s counsel for failure to comply with that order. Id. at 1225. Rule 37(a) provides generally that “a party may move for an order compelling disclosure or discovery,” including an order compelling an answer when a deponent fails to answer a question asked under Rule 30 or 31. Id. at 1222 (quoting Fed. R. Civ. P. 37(a)(1)). Judge Nguyen noted that the Ninth Circuit has thus concluded in prior cases that Rule 37(a) “encompasses an order to attend a deposition.” Id. (citing SEC v. Seabord Corp., 666 F.2d 414, 416 (9th Cir. 1982)).

In this case, the district court did not order the expert to appear for deposition. Rather, the district court ordered plaintiffs and their counsel to produce the expert for deposition. Judge Nguyen noted that although a nonparty’s attendance at a deposition can be compelled only by subpoena (subject to certain exceptions not applicable here), the district court’s order and sanctions were directed at the parties themselves and not their counsel. Id. at 1222-23.

While Rule 37 is “largely silent” as to whether a court can compel a party to produce a nonparty witness over whom the party might have influence or control, Judge Nguyen found some support in the Rules. Id. at 1223. For example, Rule 37(b)(2)(B) permits sanctions “[i]f a party fails to comply with an order under Rule 35(a) requiring it to produce another person for [physical or mental] examination.” Rule 35(a), in turn, authorizes the court “to order a party to produce for examination a person who is in its custody or under its legal control.” Fed. R. Civ. P. 35(a)(1). Judge Nguyen also noted a prior Ninth Circuit decision holding that the recovery of costs after a motion to compel filed under Rule 37(a)(5) applies to “motions to compel nonparties to attend depositions.” Id. (quoting Pennwalt Corp. v. Durand-Wayland, Inc., 708 F.2d 492, 494 n.4 (9th Cir. 1983).

Accordingly, the Ninth Circuit concluded that Rule 37(a) authorizes a district court to order a party to produce a nonparty witness for deposition. In turn, a district court also has authority under Rule 37(b) to issue sanctions for failure to comply with such an order. Id. at 1225. Rule 37(b) empowers the court to take remedial action if a party “fails to obey an order to provide or permit discovery, including an order under Rule ... 37(a).” Fed. R. Civ. P. 37(b)(2)(A). Judge Nguyen noted that other circuits had approved of similar orders and sanctions. Id. at 1223 (citing Barrett v. Atl. Richfield Co., 95 F.3d 375, 380 (5th Cir. 1996) (concluding district court properly sanctioned plaintiffs for violating discovery-related scheduling order in part “by failing to produce their experts for scheduled depositions”); Taylor v. Medtronics, Inc., 861 F.2d 980, 986 (6th Cir. 1988) (affirming sanction for discovery abuses under Rule 37(b)(2) where plaintiffs repeatedly failed to make their expert available for deposition); Nat’l Life Ins. v. Hartford Accident & Indem. Co., 615 F.2d 595, 600 (3d Cir. 1980) (concluding district court should have granted Rule 37 motion to compel accountant to appear for deposition without asserting privilege indiscriminately)).

Plaintiffs and their counsel argued that a party cannot be compelled to produce a nonparty when there is no “legal relationship” with the nonparty that would enable the party to compel the nonparty’s attendance. Id. at 1223-24. Judge Nguyen disagreed, pointing out that the order under Rule 37 directed the party to use its “best efforts” to secure the nonparty’s attendance. Id. at 1224. Because the order does not “demand the impossible,” the party can avoid sanctions by showing “that it attempted in good faith to comply with the order but was unable to produce the nonparty....Thus, a party won’t incur Rule 37 sanctions if, despite its efforts, a recalcitrant nonparty witness refuses to attend an ordered deposition.”

Judge Nguyen did note, as a practical matter, that the subpoena process should be used in most cases to compel a nonparty’s deposition. An order compelling the party to attend may make sense where, as here, the “party seeking the depositions suspects that the opposing party is the bottleneck.” Alternatively, the opposing party may have “practical reasons” for not wanting its witness to be served with a subpoena. Id. at 1225 (quoting In re Keystone Foods, Inc., 134 B.R. 828, 830 (Bankr. W.D. Pa. 1991)).

Finally, Judge Nguyen upheld the award of sanctions in this case because there was no justification for plaintiffs’ counsel’s failure to comply with the district court’s order. Indeed, plaintiffs’ counsel went on vacation while the motion to compel was pending, made no provisions for responding to the court’s order and did not read the order until after the date of the deposition had passed.

3. In Firefighters’ Retirement System v. Citco Group Ltd., 2018 WL 276941 (M.D. La. Jan. 3, 2018), Magistrate Judge Erin Wilder-Doomes rejected a party’s request to require the opposing parties to send an email questionnaire to all their employees to determine whether they had knowledge of the issues in the litigation, ruling that such a request was unduly burdensome and disproportionate to the needs of the case under Fed. R. Civ. P. 26.

Various retirement funds brought an unfair trade practices case against Citco Group Limited and its related entities. During the course of discovery, plaintiffs filed a motion to compel seeking an order requiring defendants to answer multiple interrogatories about the defendants’ discovery procedures for responding to discovery requests and gathering documents. At a status conference, the magistrate judge ruled that a 30(b)(6) deposition would help clarify and answer plaintiffs’ questions.

After the deposition, unsatisfied with the answers provided by the defendants’ Rule 30(b)(6) deponent and also unsatisfied with previous responses to interrogatories requesting the identity of persons with knowledge of “key issues,” plaintiffs renewed their motion to compel, demanding that defendants conduct additional diligence to identify additional custodians. Specifically, plaintiffs demanded that defendants be compelled to email a questionnaire to all their employees to determine their knowledge of the issues in the present litigation. Defendants filed an opposition, arguing that this request would be disproportionate to the needs of the case.

In ruling on this issue, the magistrate judge first cited Fed. R. Civ. P. 26 regarding the scope of discovery, noting that a party may obtain discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering (1) the importance of the issues at stake in the action, (2) the amount in controversy, (3) the parties’ relative access to relevant information, (4) the parties’ resources, (5) the importance of the discovery in resolving the issues, and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.” Id. at *4 (citing Fed. R. Civ. P. 26(b)(1)).

Turning to plaintiffs’ demands, the magistrate judge noted that the parties previously had agreed on 56 search terms and 21 custodians, but plaintiffs’ motions to compel had not explained why the scope of the agreed discovery was unreasonable or insufficient. The magistrate judge further stated that plaintiffs had not identified additional custodians in their renewed motion but instead had sought to expand discovery by requiring defendants to email everyone at their companies to ask whether anyone had any personal knowledge relevant to the litigation. The magistrate judge found this was “simply unreasonable,” and such a large-scale search raised proportionality concerns and would be unduly burdensome. In reaching this conclusion, the magistrate judge noted that there is “no obligation on the part of a responding party to examine every scrap of paper in its potentially voluminous files.” Id. at *6 (citing Treppel v. Biovail Corp., 233 F.R.D. 363, 374 (S.D.N.Y. Feb. 6, 2006); Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Sec., 685 F. Supp. 2d 456, 461 (S.D.N.Y. May 28, 2010)). As plaintiffs had not established that the searches conducted so far were unreasonable, the magistrate judge concluded that defendants did make reasonable efforts to identify custodians and responsive documents and denied plaintiffs’ motion to compel.

4. In Ramos v. Hopele of Fort Lauderdale, LLC, 2018 WL 138188 (S.D. Fla. March 19, 2018), Magistrate Judge Barry Seltzer denied a motion to compel production of plaintiff’s cell phone for a forensic examination because that request was not needed to obtain relevant information and was not proportional to the needs of the case or to plaintiff’s privacy concerns.

In this purported class action, plaintiff claimed that she and other class members had received telemarketing text messages from defendants Hopele of Fort Lauderdale, LLC and Pandora Jewelry, LLC without their express consent in violation of the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. § 227 et seq. During discovery, Hopele served plaintiff with a request for production asking her to produce her cell phone “for inspection and forensic imaging.” Id. at *1. Plaintiff objected that this was unnecessary, not relevant and not proportional to the needs of the case, as it was undisputed that Hopele had in fact sent the text messages in question to plaintiff’s phone.

Hopele moved to compel production. It argued that “a forensic examination is necessary because Plaintiff has allowed or caused the text messages at issue to be deleted from her cell phone.” While a screenshot of the texts had been preserved, Hopele insisted that production was necessary so that it could view any preserved metadata connected with the texts. Finding out what had happened to the texts, according to Hopele, was “relevant (if not central) to Plaintiff’s claims” as it might shed light on potential spoliation as well as on damages. Further, in its reply brief, “Hopele reported that two days after Plaintiff testified in deposition that she only received two [telemarketing] text messages ... her attorney notified [Hopele] that she had discovered eight additional text messages on her cell phone, all from Hopele.” Hopele argued that this disclosure warranted investigation as plaintiff had previously stated that her cell phone automatically deleted text messages after 30 days.

The magistrate judge began his analysis by quoting Fed. R. Civ. P. 26(b)(1), which provides that discovery must be proportional to the needs of the case. He then cited a number of authorities discussing the “potential intrusiveness of forensic imaging of electronic devices” and noted in passing his disagreement with Sherman v. Yahoo! Inc., 3:313-CV-41 (S.D. Cal Feb. 20, 2015) “to the extent that [the California] court considered a forensic telephone examination to be a ‘minor inconvenience,’ without regard for privacy interests.” Id. at *2.

The magistrate judge explained that “Plaintiff’s deletion of the actual text messages does not appear to be relevant to any claim or defense in this case,” as Hopele had “admitted ... that it ‘communicated with Plaintiff through’ an automatic text messaging platform on the relevant dates.’ ” In addition, Hopele did not contend that plaintiff had consented to receiving texts, and that, unlike some other cases that had allowed limited forensic examination of a cell phone, Hopele had “put no limits on the scope of its requested forensic examination.” Id. at *3. The magistrate judge also concluded that the circumstances in which the texts were received were not relevant, as receipt of a text message alone constituted an injury-in-fact under the TCPA. Id. (collecting cases). He also determined that no class-related issues would be addressed as a result of a forensic examination. Finally, with respect to the additional eight text messages plaintiff received, he “note[d] that those ... messages are not alleged in the Complaint and, therefore, at this moment, are not relevant to the claims or defenses in the case.”

The magistrate judge therefore concluded that “Hopele’s request for a forensic examination of Plaintiff’s cell phone [was] not tailored to obtain information that is relevant to any claim or defense in this case [and] is not proportional to the needs of the case or to Plaintiff’s privacy concerns” and denied the motion to compel.