1 William Mitchell E-Discovery Symposium Outlaw v. Willow Oral Argument Motions for Sanctions Mary T. Novacheck, Esq. Partner Bowman and Brooke LLP
2 Outlaw's Motion: Cost Shift Vendor Fees to Willow Prior Discovery Order: Willow: 4 computers containing relevant information Outlaw represented to the Court $25,000 in vendor fees to image 4 computers and servers Court: discovery permitted; ordered parties to split the cost of the vendor
3 The Mexican Road Trip: Expensive and Outside the Order In Mexico, without conferring with Counsel for Willow or the Court, Outlaw's counsel and vendor: Allowed the vendor to "question" employees of a represented party "learns about many more computers than Willow had disclosed" The expert images ALL of the computers Fee: $395,000
4 Lack of Proportionality
5 Lack of Proportionality Today's FRCP 26(b)(2)(C)(iii)
6 Tomorrow's 26(b)(1) Proportionality "Moves Up"
7 In Minnesota Must Show Proportionality Prior to EDiscovery MRCP 26.02(b)
8 Imaging ALL Computers was not Proportional Needs of the case image key player's computers Images of support staff, duplicative sources The amount in controversy: $3,000,000 Whether the burden or expense outweighs its likely benefit
9 Fees Billed out of "Proportion" Court Ordered ESI vendor fee The amount in controversy is $3,000,000. The Court approved ESI vendor budget was $25,000 (.8% of the amount in controversy), to be split equally by the parties, $12,500 (.4%) each.
10 Fees Billed out of "Proportion" Court Ordered ESI vendor fee Billed ESI Costs The amount in controversy is $3,000,000. The Court approved ESI vendor budget was $25,000 (.08% of the amount in controversy), to be split equally by the parties, $12,500 (.04%) each. The vendor's current bill of $395,000 is 13% of the amount in controversy. $395,000 is 31 times greater than Willow's Court Ordered contribution of $12,500.
11 Outlaw's Basis for Cost Shifting Not Established Willow's VP used a commercial computer wiping software two days before the inspection of his computer -- undisputed Not defending it The VP knew of Willow's Litigation Hold What do we know about what has been wiped or why? Discovery not conducted deposition of VP is necessary to determine why he used the wiping product Not necessarily relevant files, many other potentially embarrassing types of ESI Insufficient facts re whether Willow is to be sanctioned for VP's misconduct
12 Outlaw's Cost Shifting Request Fails a Reasonable Alternative Existed Outlaw should have chosen "Plan B" Should have told the vendor "no," returned and conducted discovery related to additional computers Needed to develop a factual basis supporting forensic imaging of ALL computers Plan B would reduce ediscovery costs even if the Court decides twice the computers should have been imaged.
13 Fees Billed if "Plan B" Requested Costs Shifted to Willow Plan B Costs Outlaw values the case at $3,000,000; seeks to shift $395,000 in ediscovery costs to Willow -- 13% of the amount in controversy Plan B: Reduces the cost of ediscovery to 1.6% of the amount in controversy
14 Outlaw's MTC: Hard Copy Documents Willow: "about three boxes of responsive documents." "in Spanish and two-sided" 5,000 pages per banker's box (www.legalscans.com) x 3 = 15,000 in 3 boxes x 2 = 30,000 two-sided pages in 3 boxes Outlaw: "100,000s of documents found" Translated ALL without conferring with Willow Found that "70% are irrelevant" 30% of 100,000 documents = 30,000 documents Failure to confer: had Outlaw conferred, we would have been able to locate responsive documents and avoided the translation and copying costs of the 70% irrelevant The costs associated with adversarial conduct in pre-trial discovery have become a serious burden to the American judicial system. (Sedona Conference Cooperation Proclamation)
15 Willow's Motion to Compel: Spoliation Outlaw s deleted not disputed Did not issue a litigation hold not disputed Has not turned off auto-delete functions not disputed Has not suspended backup tape overwriting not disputed Outlaw's counsel turned on computer/evidence in his possession not disputed
16 Practice Standards: ESI Must be Preserved Legal Holds must be issued/must be in written form: "Possibly after October, 2003, when Zubulake IV was issued, and definitely after July, 2004, when the final relevant Zubulake opinion was issued, the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information." Judge Shira Scheindlin, S.D. of N.Y., Pension Committee v. Banc of America Securities, January 2010 (emphasis added)
17 Minnesota WG1: Primer on EDiscovery
18 Minnesota WG2: Legal Holds
19 Minnesota WG 3: ESI Technologies and Cost Effective Preservation
20 Minnesota WG 4: Conferring with OC
21 Minnesota WG 5: Production
22 Outlaw's Spoliation Warrants Dismissal Anticipated amendments to FRCP 37(e): "Failure to Preserve Discoverable Information" (1) Curative measures; sanctions. If a party failed to preserve discoverable information that should have been preserved in the anticipation or conduct of litigation, the court may: (B) impose any sanction listed in Rule 37(b)(2)(A) or give an adverse inference jury instruction, but only if the court finds that the party s actions: (ii) irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation.
23 Spoliation Warrants Dismissal Impossible to determine if evidence supporting Willow's defenses has been lost Willow denies any wrong doing under its contract with Outlaw Willow believes Outlaw's damages are grossly exaggerated Undisputed and continuing loss of ESI at Outlaw Request an order pursuant to FRCP 37(b)(2)(A)(v) "dismissal of the action"
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