Welcome to Module 2-E.

Two Cases of Inexpert Search

BAD LAWYERNext, we are going to consider a case where legal counsel’s “nonchalant review” of electronic records acted to waive the attorney-client privilege as to four inadvertently disclosed emails. Gragg v. International Management Group (UK) Inc., 2007 WL 1074894 (N.D. N.Y. April 2007). Then after that we will look at a decision in Texas suggests that inadequate keyword searches could lay a predicate for spoliation sanctions when the defective searches cause evidence to be lost. Diabetes Centers of America, Inc. v. Healthpia America, Inc..

Case Showing What Can Happen When Search is Conducted Without Due Diligence

The following facts in Gragg were found to constitute a failure to take reasonable precautions to prevent inadvertent disclosure of privileged materials, justifying a waiver as to those documents. Gragg v. International Management Group (UK) Inc., 2007 WL 1074894 (N.D. N.Y. April 2007). Defendant’s outside counsel asked in-house counsel “to prepare and produce to him all documents relative to the proposed project.” In-house counsel in turn delegated the task to a “non-attorney assistant.” The assistant “then prepared and compiled in electronic format a disk containing those materials and forwarded them directly to defendant’s outside counsel who in turn, without first reviewing the documents, sent the disk to plaintiff’s attorney.”

Defendants argued that it was reasonable for their outside counsel to rely upon in-house counsel to make the requisite privilege review, and to assume that it had been accomplished before the disk was sent to him. The court was not inclined to accept this argument because there had been no discussions between the outside counsel and the non-attorney assistant who supposedly did the review, or the in-house counsel who supposedly supervised the assistant’s activities. The court considered these facts and concluded:

Given the significance of the attorney-client privilege and the potential consequences associated with a waiver of that privilege, this nonchalance leads me to conclude that reasonable precautions were not taken to prevent the disclosure of privileged materials.

Id. at *6. As a secondary factor, the court noted that there were only 200 emails on the CD-ROM produced, and so the task of review prior to production “would not have been particularly onerous.”

Unfortunately for defendants, the four emails in question contained litigation strategy discussions. The emails did not address the underlying transaction. Defendants argued that for this reason it was especially unfair to find a waiver based on inadvertent disclosure. The court considered fairness, but concluded that this argument was “far overshadowed by the defendant’s failure to implement reasonable measures to avoid inadvertent disclosure.”

Plaintiff argued that the waiver should be a full subject matter waiver, “opening the door to full disclosure including deposition of defendants’ litigation attorneys.” Obviously the plaintiff was overreaching on that one, and so the Court instead accepted defendants’ argument for a “more reasoned, limited waiver” extending only to the materials at issue.

Still, plaintiff pressed to take the deposition of defendants’ in-house counsel based on attorney-client privilege waiver. The court rejected this request as an attempt to further probe defense counsel for information on their litigation strategy. The court would not permit such an attorney deposition, even if limited to the four emails where the privilege had been waived, noting that such questioning would inevitably go beyond the four emails, and invade privileged attorney work product.

Another Case of Inadequate Search Suggests it Could be Sanctionable

Sherlock HolmesA decision in Texas suggests that inadequate keyword searches could lay a predicate for spoliation sanctions when the defective searches cause evidence to be lost. Diabetes Centers of America, Inc. v. Healthpia America, Inc., 2008 U.S. Dist. LEXIS 8362, 2008 WL 336382 (S.D. Tex. Feb. 5, 2008). The plaintiff relied upon an untrained associate attorney to do keyword searches, apparently to decide which emails of a key witness to preserve and produce. The associate’s sleuthing skills were poor and she botched the job. As a result, numerous relevant emails were lost; emails that defendants claimed would have helped their defense.

Although the court here declined to impose sanctions, that was, in my view, largely because the defense also made mistakes in failing to preserve their email. It was, in effect, a case of off-setting penalties. Sanctions may well have been granted if the moving party had been wearing a white hat. The opinion suggests that sanctions may be appropriate in other cases where evidence is lost because important searches were recklessly entrusted to Inspector Clouseau types.

This case is a warning to everyone who does keyword searches in e-discovery, and especially to anyone who, like the plaintiff’s counsel in this case, over-delegates these searches to young associates with no training or supervision. Care must be used in determining the search procedures and terms. This important task should not be delegated to untrained, unsupervised personnel.

This case underscores the point made by Judge Facciola in United States v. O’Keefe, No. 06-249 (D.D.C. Feb. 18, 2008), that keyword search analysis is a very complex area of e-discovery “where angels fear to tread.” He implies that only fools attempt the task of computer search without expert help. You may not need to hire the e-discovery search equivalent of Sherlock Holmes for every case, but for some cases, it may be a good idea. This is especially true when large amounts of ESI are involved. Then, more sophisticated concept-type search alternatives to keyword search should be considered because keyword searches alone may not work.

Facts of the Case

The defendants in Diabetes Centers alleged that:

Plaintiff (specifically Dr. Kimon Angelides, founder and COO of Diabetes) failed to preserve and produce critical emails that were contrary to Plaintiff’s position in this lawsuit.

To support the alleged spoliation, defendants pointed to relevant emails to and from Dr. Angelides that they obtained from third parties, but were never produced by the plaintiff. Defendants argued that additional emails must exist adverse to the plaintiff, and they must also have been withheld or destroyed. This is typically the way fraud and spoliation are proven, since the alleged spoliator rarely admits to the crime. To quote Holmes: “We balance probabilities and choose the most likely. It is the scientific use of the imagination.” Hound of the Baskervilles.

District Court Judge Nancy Atlas reacted by scheduling an evidentiary hearing on defendants’ motion for sanctions. The motion sought an adverse inference jury instruction as punishment for losing much of the COO’s email. “Come, Watson, come! The game is afoot.” The Adventure of the Abbey Grange.

At the hearing, plaintiff’s counsel came up with a surprise defense to the spoliation motion, a defense which is commonly referred to as the “fall-on-your-own-sword” defense. Here, a lawyer protects his client by taking all of the blame upon himself. (In reality, there is usually more than enough blame for all concerned.) It is a rarely used argument because of the obvious danger of creating a malpractice trap should it not succeed. In spite of this risk, plaintiff’s counsel used this defense here. Fortunately for him, it worked.

Plaintiff’s counsel argued that it was not his client’s fault that relevant emails were lost and not produced; instead it was his fault. Well, actually, he said it was the fault of his associate, a young woman just out of law school. The partner argued that his associate acted in good faith, with no intent to destroy evidence; she just did not know what she was doing. He argued that his law firm, not his client, Dr. Angelides, should be blamed for the missing emails, and they simply made an honest mistake. This is an effective argument. A court might suspect the motives of a party to litigation if emails are mysteriously missing, but are unlikely to suspect the motives of a young lawyer. Of course, it was just an innocent mistake, so no sanctions are appropriate, especially the potentially case-ending adverse inference sanctions sought here. Here is Judge Atlas’ summary of what happened:

Plaintiff’s counsel conceded at the hearing that the task of searching Plaintiff’s records for relevant emails in response to Defendants’ discovery request was entrusted to a junior associate. It is apparent that the associate worked with little or no direction or supervision. The search terms used by the associate were inadequate — they did not even include the term “phone” — and, as a result, she failed to locate or perceive the significance of the emails about which Defendants now complain.

Obviously, the unsupervised associate here did not have a clue, since Judge Atlas states she overlooked the most obvious search term of all. As Sherlock would say: “You see, but you do not observe.” A Scandal in Bohemia.

In addition to the “associate screwed up” defense, plaintiff’s counsel employed another well known strategy: “the best defense is a good offense.” Plaintiff alleged that defendants had intentionally destroyed electronic evidence, and filed its own counter-motion for sanctions. Defendants admitted that they lost some of their email, but claimed it was not their fault because two of their laptops were stolen. The plaintiff alleged that these thefts were a fraud. Further, even if plaintiff could not prove defendants were lying about these convenient losses, plaintiff argued that sanctions should still be imposed against defendants. The alternate ground for sanctions was their negligence for not having made another copy of the emails in the key players’ laptop computers. I presume from the opinion that the alleged thefts happened after suit was filed or the duty to preserve was otherwise triggered.

Defendants claimed that these were bona fide thefts. Further, they claimed it was their usual and normal procedure not to have any email backups. Here is how Judge Atlas summed it up:

Plaintiff alleges that Defendants failed to back up emails that were subsequently lost when the two laptops containing the emails were stolen. (FN2: Plaintiff also questions whether these laptops were actually stolen by third parties.) Steven Kim’s laptop was stolen from a friend’s car outside Kennedy Airport while he and his friend were loading Kim’s bags into the trunk of the car. The laptop belonging to Douglas Kim (no family relation to Steven Kim) was stolen from his Healthpia office cubicle. Email retention on these laptops, although not backed up to a third party or Healthpia server, was handled in accordance with Healthpia’s standard procedures.

These facts remind me of Holmes’ statement in A Case of Identity, “Life is infinitely stranger than anything which the mind of man could invent.”

Holding

Who knows what the truth is here? In a situation like this, with credible cross-allegations of wrong-doing by all parties, the judicial response of “a pox on both your houses” is not uncommon, although usually not spoken aloud by the judge. But see JN Intern., Inc. v. M/S Transgene Biotek Ltd., 2006 WL 1559709 (D.Neb., 2006.) (“While continuing to have high regard for the lawyers and the mediator, the phrase ‘a pox on all your houses’ is particularly apt in this circumstance.”). This response is understandable, and since many lawyers know this, it encourages the “offense as best defense” strategy. In this case, Judge Atlas is discrete, and speaks in terms of good faith, not plagues, but still denies relief to both sides:

Neither party has presented evidence of bad faith. The Court credits Defendants’ evidence that the laptops were stolen, and not intentionally destroyed or hidden. Defendants may not have taken adequate steps to preserve emails through a back-up process, but Defendants followed the company’s standard procedures. If anything, there has been a showing of negligence derived from lax electronic document maintenance procedures. Similarly, at most, Plaintiff’s counsel may have been lax in that inadequate direction and oversight was given to the associate to guide her search for relevant and responsive emails. There is no evidence that he or the associate acted in bad faith. The Court, in an exercise of its discretion, denies both parties’ requests for an instruction on spoliation.

. . . . .

The conduct by both sides discussed herein is questionable; all parties have been remiss in fulfilling their own discovery obligations and keeping the opponent informed of pertinent matters. The parties, however, are too quick to criticize the other side for any infraction of the discovery rules. The Court, in an exercise of its discretion, declines to impose sanctions against either party.

Conclusion

Sherlock Holmes in the Twenty First Century

The lesson of this decision is clear. If a party in litigation is going to rely upon keyword searches as the basis for evidence preservation, which is in itself a questionable strategy, then it had better be sure the searches used are adequate. Delegation to others should be made with care. Although Sherlock Holmes’ perfection in this area is unattainable, this does not excuse obviously negligent search strategies.

Sherlock was correct to state in The Adventure of the Dancing Men that “What one man can invent, another can discover.” The common law system of discovery is premised on the ability of good detective work to uncover the truth. Yet in the area of computer search, Holmes’ statement in The Reigate Puzzle also applies, “These are much deeper waters than I had thought.”

If you do not have the input of experienced specialists, as Judge Facciola suggests may sometimes be necessary, then you should at least personally engage in careful analysis to be sure your search terms are adequate. You should not simply turn it over to the youngest attorney available and provide no direction or oversight. Just because they are young and comfortable with computers and are good with Google, Westlaw, or Lexis, does not mean they are qualified to do e-discovery searches on their own. Ideally, if you must rely upon search terms as a basis for preservation, then you should try to obtain agreement from opposing counsel on the adequacy of the terms used, or, if that is not possible, seek judicial review at the beginning of the case, not the end.

“Education never ends, Watson. It is a series of lessons, with the greatest for the last.” The Adventure of the Red Circle (Arthur Conan Doyle 1859-1930).

EXERCISE: Find and read another essay by Ralph Losey on Sherlock Holmes and electronic discovery. For fun, come up with another Sherlock quote that is somehow applicable to e-discovery. By the way, do you know what well known judge in e-discovery is a real expert in Sherlock Holmes?

Students are invited to leave a public comment below. Insights that might help other students are especially welcome. Let’s collaborate!

Copyright Ralph Losey 2015


Ralph Losey is a practicing attorney who specializes in electronic discovery law. He is a principal in a U.S. law firm with over 50 offices & 800 lawyers where he supervises electronic discovery work and litigation support. Ralph has written over two million words on law and technology, including six books on electronic discovery. His latest books are "E-Discovery for Everyone" (ABA 2017) and "Perspectives on Predictive Coding" (ABA 2017) (ed. & contributor). His blog is widely read in the industry: "e-DiscoveryTeam.com." Ralph is the founder and principal author of "Electronic Discovery Best Practices" and "e-Discovery Team Training," a free online course covering all aspects of e-discovery. Ralph's sub-speciality is the search and review of electronic evidence using multimodal methods, including artificial intelligence. He also has a free online training program to teach these advanced methods - the "TAR Course." Ralph has devoted a month of his time each year since 2013 to research and test various AI-enhanced document review methods. In 2015 and 2016 Ralph and his Team participated in the TREC Total Recall Track experiments sponsored by the National Institute of Standards and Technology. Ralph has been involved with computers and the law since 1978. His full biography is found at RalphLosey.com. Ralph is the proud father of two children, Eva M. Losey and Adam Colby Losey, a high-tech lawyer married to another e-discovery lawyer, Cat Jackson Losey, and, best of all, Ralph has been married since 1973 to Molly Friedman Losey, a mental health counselor and life-long friend.

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