Analyzing the First Six Months of eDiscovery Case Law 2023 – Part 1

As eDiscovery evolves, legal professionals must stay updated on the latest eDiscovery case law and developments. The first half of 2023 has seen significant advancements and noteworthy cases that have shaped the landscape of eDiscovery. In this two-part blog series, we will delve into the key highlights and insights from the notable cases and events that have unfolded from January to June 2023. Today, we are covering January through March and tomorrow’s post will cover April through June.

January: Breaking New Ground in eDiscovery

The year kicked off with several notable cases and events that set the stage for what was to come. Highlighted cases include:

ImprimisRx, LLC v. OSRX, Inc. (U.S. District Court for the Southern District of California):

The court denied the Defendants’ motion to compel Plaintiff to disclose information about the sources, methodology, and search terms used to collect electronically stored information (ESI) from one of its custodians. The court emphasized the importance of parties exchanging ESI search terms at the outset of the case and ordered the parties to meet and confer regarding appropriate search terms to narrow their disputes.

Page v. Bragg Communities, LLC (U.S. District Court for the Eastern District of North Carolina):
The court overruled the Defendants’ objections based on the “apex doctrine” and ordered the Plaintiffs to add their former president as an ESI custodian. The court rejected the argument that the former president was an “apex custodian” and found that the Plaintiffs provided evidence that the former president had independent involvement and communications relevant to the issues in the case.

Linhares v. Woods Hole, Martha’s Vineyard, et al. (U.S. District Court for the District of Massachusetts):
The court compelled the Defendant to produce documents in the possession of a vendor, ruling that the documents were within the Defendant’s possession, custody, or control. The court construed the concept of “control” broadly and found that Defendant had the practical ability to obtain the service-related documents from the vendor.

United States Equal Employment Opportunity Commission v. Qualtool, Inc. (U.S. District Court for the Middle District of Florida):
The court compelled Defendant to run specific search terms but declined to compel Defendant to disclose its search history for the searches it had already conducted. The court found that Defendant had not sufficiently demonstrated that Plaintiff’s collection and production of documents were insufficient or deficient. Therefore, Defendant was not required to disclose its search terms.

February: Examining Key Trends and Precedents

In February, eDiscovery continued to make headlines with significant cases that continue to shape the legal landscape:

OL Private Counsel, LLC v. Olson, the U.S. District Court for the District of Utah:
In OL Private Counsel, LLC v. Olson, the U.S. District Court for the District of Utah overruled an objection to discovery based on Thai privacy law. Plaintiff, a law firm, argued that the law precluded disclosing personal identifying information. Defendant sought the identity of individuals and entities with access to Plaintiff’s server, but Plaintiff claimed it was irrelevant and unduly burdensome. The court found the requested information relevant and proportional to the case. It was determined that Plaintiff had not established that the foreign law applied or prevented the discovery. The court concluded that Plaintiff’s burden did not outweigh the likely benefit and ordered Plaintiff to provide information about individuals and entities with access to its servers.

Carty v. Steem Monsters Corp., the U.S. District Court for the Eastern District of Pennsylvania:
In Carty v. Steem Monsters Corp., the U.S. District Court for the Eastern District of Pennsylvania denied a motion for sanctions based on alleged spoliation of Discord threads. Plaintiff claimed that the Defendants had deleted certain messages and data from the Steem Monsters Discord channel in violation of a preservation notice. However, the Defendants provided evidence that either hackers or moderators did the deletions to prevent scams or avoid detection. The court found that Plaintiff had not demonstrated that spoliation had occurred or that there was an intent to deprive Plaintiff of access to relevant information. Additionally, the court noted that Plaintiff had not shown any prejudice resulting from the alleged spoliation. Therefore, the motion for sanctions was denied.

In re Homeadvisor, Inc. Litigation, a discovery master in the U.S. District Court for the District of Colorado:
In the case of In re Homeadvisor, Inc. Litigation, a discovery master in the U.S. District Court for the District of Colorado granted some sanctions against the Plaintiffs’ counsel but denied others. Defendants sought the sanctions due to the Plaintiffs’ counsel’s use of protected discovery material for the improper purpose of influencing an FTC investigation and the obfuscation of their use of the material through improper objections and misleading discovery responses.

The case involved a putative class action where home service professionals alleged deception by the Defendant company. During the discovery process, it was discovered that the Plaintiffs and their counsel had used confidential discovery materials to steer the FTC’s investigation into the Defendants without disclosing these communications. Additionally, Plaintiffs’ counsel provided misleading statements regarding the production of communications with the FTC.

The discovery master found that the plaintiff’s counsel’s objections and withholding of communications were improper and violated the protective order. The master also determined that the Plaintiffs’ counsel’s misrepresentations were intentional and that their communications with the FTC using confidential materials violated the protective order.

Regarding sanctions, the master declined the Defendants’ request for further discovery into the Plaintiffs’ communications with the FTC and access to in-camera declarations. The master also denied the request for civil contempt sanctions but imposed reimbursement of fees and costs on the Plaintiffs’ counsel for their discovery violations. The preclusion of evidence related to the FTC-related discovery was not granted, as it was deemed too drastic a sanction. The master ordered the Plaintiffs’ counsel, rather than the Plaintiffs themselves, to reimburse the Defendants for the master’s fees incurred during the dispute.

Stephan Zouras LLP v. Marrone:

In the case of Stephan Zouras LLP v. Marrone, the U.S. Magistrate Judge Martin C. Carlson in the Middle District of Pennsylvania overruled the Defendants’ objections to a discovery request that required a search through over 100,000 emails. The judge found that the search was proportionate considering the significant relevance of the requested documents and that applying the Sedona principles would help mitigate the burden on the Defendants.

The lawsuit involved a dispute between two law firms over a joint fee award obtained in a prior employment action under the Fair Labor Standards Act (FLSA). The Plaintiff claimed that the Defendants had not contributed their fair share to the case, leading to the current lawsuit. During discovery, Plaintiff requested all documents supporting the Defendants’ fee petition in the previous litigation. The Defendants produced only 13 documents and argued that further discovery was irrelevant and burdensome.

The magistrate judge determined that the requested documents were relevant to the claims in the current litigation, as the hours worked and the nature of the work were essential factors to be considered. The judge rejected the Defendants’ argument that the aggregate fee award calculation in FLSA disputes used a distinct “percent of recovery” approach, finding it conflated with the reasonableness of the fee award distribution. The judge concluded that the request was not unduly burdensome, considering the substantial amount of money at stake and the need to examine the supporting documents thoroughly.

Regarding the burden of searching through over 100,000 emails, the judge emphasized that technological advances had made manual review unnecessary. Citing the Sedona principles, which propose best practices for handling electronic document production, the judge noted that parties must work cooperatively and collaboratively to devise discovery strategies. The judge suggested using relevant search terms or technology-assisted review and ongoing data sampling to mitigate the burden of searching through electronic documents.

Therefore, the judge ordered the parties to engage in a collaborative process consistent with the Sedona principles, which would help reduce the burden of the discovery request.

March: Evolving Challenges in eDiscovery

March brought forth its own unique challenges and important decisions in eDiscovery.

Resolute Forest Products, Inc. v. Greenpeace International:

In Resolute Forest Products, Inc. v. Greenpeace International, the court granted monetary and adverse inference sanctions for several discovery failures. The failures included the Defendant’s failure to disable the auto-delete function for Skype message data and the failure to preserve text messages. However, the court declined to impose sanctions for messages lost during a migration process conducted by Microsoft without notice to the Defendant. The court found that Defendant had taken reasonable steps to preserve the data lost due to the migration, but the failure to turn off the auto-delete option on Skype was deemed unreasonable. The court ordered the Defendant to pay attorneys’ fees, a portion of the motion filing costs and instructed the jury regarding the spoliation of Skype message evidence. Additionally, the court granted sanctions against Plaintiff for failing to search and preserve text messages, awarding attorneys’ fees for Defendant’s motion for sanctions due to Plaintiff’s lack of reasonable steps to produce or preserve the texts.

Securities and Exchange Commission v. Volkswagen Aktiengesellschaft:

In Securities and Exchange Commission v. Volkswagen Aktiengesellschaft, the court sustained the Defendant’s objection to an interrogatory based on attorney work product privilege. The interrogatory asked Volkswagen to identify individuals who knew about the conduct in question and provide the basis for Volkswagen’s belief. The court determined that answering the interrogatory would require Volkswagen’s lawyers to investigate facts, draw conclusions, and rely on their impressions and opinions. The court explained that while lawyers can act as conduits for information in response to interrogatories, in this case, Volkswagen’s lawyers would need to evaluate and form opinions about the information, which falls within the protected attorney work product. The court rejected the argument that the interrogatory was a permissible contention interrogatory. It emphasized that the purpose of the work product rule is to prevent the exploitation of a party’s litigation preparations. The SEC must obtain the desired information through traditional discovery means rather than compelling Volkswagen to share opinions about non-directly related facts.

Sunlight Financial LLC v. Hinkle:

In Sunlight Financial LLC v. Hinkle, the court ordered the defendant to produce electronically stored information (ESI) that the defendant claimed did not have the practical ability to produce. The defendant had given the ESI to a third party and no longer retained a copy. The defendant argued that the ESI contained proprietary information of the third party, and it lacked the legal authority to produce it. However, the court found that the defendant did not meet the high bar required to show the impossibility of compliance. The court noted that the defendant had possession and control over the ESI when it turned it over to the third party and destroyed it. The court emphasized that the defendant’s objection based on legal authority was insufficient to avoid production. The court ordered the defendant to produce the ESI, highlighting that the third party had alternative means to protect its proprietary information, such as intervening in the case or preventing the retention of proprietary information on personal devices.

In re Facebook, Inc. Consumer Privacy User Profile Litigation

In the case of In re Facebook, Inc. Consumer Privacy User Profile Litigation, the court granted sanctions against Facebook and its outside counsel, Gibson Dunn, for their repeated bad-faith conduct during the discovery process. The litigation involved allegations of Facebook’s misuse of personal information. The court found that Facebook and Gibson Dunn engaged in various sanctionable behaviors, including making frivolous arguments, withholding discoverable documents, and producing documents in difficult and obscure formats.

Judge Chhabria emphasized that the court’s inherent power to sanction should be exercised with restraint and discretion. He identified specific instances of misconduct that demonstrated Facebook and Gibson Dunn’s bad faith throughout the litigation. This included their refusal to disclose information related to an internal investigation, making frivolous arguments to delay production, and using the over-designation of privileged documents. The court concluded that their conduct hindered the discovery process and demonstrated a lack of cooperation.

Judge Chhabria rejected Facebook and Gibson Dunn’s attempts to shift blame onto the plaintiffs’ counsel and their claims of improved behavior. He emphasized that their misconduct had been sustained and intentional, resulting in unnecessary delays and expenses for the opposing party.

In response to the misconduct, the court awarded $925,078.51 in fees and costs, representing half of the plaintiffs’ requested amount. The court acknowledged that this amount might not be substantial for Facebook or Gibson Dunn but aimed to protect litigants from financial harm caused by opponents’ misconduct. The ruling intended to serve as a deterrent against future misconduct and promote more honorable behavior in litigation.

The first six months of 2023 witnessed significant developments in eDiscovery case law, highlighting the ever-evolving nature of this field. Tomorrow, we will post case law updates from April through June 2023.