eDiscovery: If You Delay, Courts Will Make You Pay

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stackofpapersBy IT-Lex Intern Joey Chindamo (LinkedIn)

A fascinating eDiscovery case out of Maryland federal court last month could be a game-changer in the area of electronically stored information (ESI).

The United States District Court for the District of Maryland released its opinion in Branhaven, LLC v. Beeftek, Inc. [PDF] on January 4. The court imposed sanctions against the Plaintiff, Branhaven, and also imposed sanctions on Plaintiff’s counsel, for discovery violations on multiple grounds after defense counsel complained about “discovery abuses intended to harass defendants, cause unnecessary delay, and needlessly increase the cost of litigation[.]”

Essentially, the Defendants had filed requests for production, and the Plaintiff’s counsel responded, saying the Plaintiff would make the requested documents available. Plaintiff’s counsel then signed off on the response. As it turns out, Plaintiff’s counsel did little more than forward the discovery request to Branhaven and never followed up. The court held the discovery response to be insufficient:

 “[W]ith its meaningless and arguably misleading response, plaintiff simply tried to buy time and technically comply with Rule 34. One of plaintiff’s counsel essentially admitted as much.”

The requests to produce were served on the Plaintiff on January 31, 2012, and the timeline was addressed by the court:

“The record undisputedly shows that as of March 21, plaintiff’s counsel had done little, or nothing, in terms of a reasonable inquiry and indeed had no knowledge of the number and identity of responsive documents.  Indeed, it does not appear that plaintiff’s counsel took any action until the middle of June.”

On June 14, 2012, production of the documents finally began, but by July 20, only 388 total pages had been produced. But on July 20, just days before depositions were set to begin, Branhaven produced 112,106 pages. The surge in production came from a search of email servers and the discovery of two forgotten laptops. Branhaven’s explanation:

“The sources of the documents referred to as the ‘document dump’ by defendants were computer servers Branhaven purchased as part of the asset sale of another entity in 2011. Branhaven did not have access to the passwords necessary to access the servers. Branhaven is also essentially a start-up company and its litigation funds are not unlimited. Branhaven was concerned about the expenses associated with vendor assisted electronic discovery and accordingly it attempted to obtain the documents itself, using its in-house information technology staff.”

The court was anything but happy with Branhaven’s excuses:

 “Plaintiff’s explanation is wholly unacceptable . . . Branhaven delayed approximately five months before seeking an outside vendor from the date of the request for production.  While a one month delay to allow an in house effort to access the servers might be seen as acceptable; a five month delay with its impact on the opposing party’s discovery is not. Second, Branhaven is the plaintiff!  Surely before initiating a lawsuit, which of course has resulted in substantial defense costs, Branhaven must have understood that it necessarily also would be subject to discovery demands with the attendant costs.”

The court found the plaintiff’s behavior to be misleading, too, because of its March response to the defense’s request for production. While Branhaven had made a statement in March that it would make the responsive documents available, the court reasonably inferred that it had made no attempts until July to do so. The court’s language is compelling:

 “Plaintiff’s delay in addressing the lack of access to these email servers is inexcusable.  There is no more obvious and critical source of information in the 21st century than a company’s email accounts. Plaintiff’s counsel’s failure to identify and produce this discovery in a timely fashion and in an acceptable form and manner while suggesting – if not misleading defendants – that it had identified responsive documents is sanctionable.”

Further complicating this already murky production was the nature by which Branhaven did it. Branhaven produced PDF files without Bates stamping. The Defendants objected, saying that the files should have been in TIFF format with Bates stamping—without it, the files were not “reasonably usable.” Despite arguments from Branhaven that no rules required the production as Bates stamped-TIFF files, the court disagreed:

 “While the Court agrees that the PDF format and lack of Bates-stamping does not violate any explicit agreement between the parties, it appears to violate Rule 34 and appears contrary to customary and reasonable practice especially in voluminous productions and further complicated defendants’ review of the documents, causing further expense and delay.  Through the McNeil affidavit defendants have demonstrated that without Bates stamping and .tiff format, the data was not reasonably usable and therefore was insufficient under Rule 34.”

The court’s reasoning here establishes a potentially dangerous and overly burdensome precedent for attorneys dealing with eDiscovery, and the problem comes down to file types. As the Bow Tie Law Blog explains, PDF and TIFF files are essentially “static images.” You can think of them as photographs of a document. Both can be made to be searchable, an invaluable tool when dealing with digital files, but adding searchability not only bloats the file sizes but also adds a burden for the producing party. The Defendants in the Branhaven court’s requests for Bates stamped-TIFF files attempt to mimic a timeless method of production—paper. As the Bow Tie Law Blog said:

 “Why is [Branhaven] . . . a nightmare for me? Because it applies a paper model of discovery to electronically stored information, requiring a conversion of ESI into a TIFF with Bates Stamps (a conversion which can triple processing costs with some service providers). What is even stranger about it is the form of production battle centered on PDFs vs TIFF, both of which are static images. One difference is a PDF can be either non-searchable (thus like a TIFF) or searchable (thus more like a native file).”

As the Branhaven opinion notes, TIFFs have long been used in eDiscovery. But this white paper seems to indicate that for legal purposes, and what litigants actually need discovery for—the ease of finding the information they need—PDF is the superior file type and more sustainable for the future.

IT-Lex Member Ralph Losey wrote about the inadequacies [PDF] of Bates stamping electronically stored information back in 2007, and in his article, Mr. Losey addressed the sheer unimaginable volume of digital information. For those whose eyes have glazed over with the tech talk, concrete examples may be illustrative. Take Mr. Losey’s discussion of the Enron collapse and the subsequent discovery:

 “For example, when Enron collapsed and all of its records became the subject of government investigation and numerous lawsuits, the parties discovered that this company alone maintained digital evidence over 200 terabytes in size. Comparing this number to the size of the entire print collection of the Library of Congress, Enron had twenty times more ESI than the library. From this, we may reasonably infer that, by the turn of the century, most major corporations in the United States had already stored enough ESI to fill twenty Libraries of Congress.”

But maybe that does not truly hammer home just how much information that is. Let’s put it into astronomical terms, an illustrative technique I have personally loved since childhood.

The circumference of the Earth is approximately 24,901.55 miles. Laid end-to-end, it would take 143,432,928 sheets of standard 8.5×11 paper to wrap completely around Earth one time. Now, assuming that a gigabyte of digital storage is approximately 500,000 pages, the 200 terabytes of Enron discovery would equate, very roughly, to more than 102 billion pages.

Laid end-to-end, the Enron discovery alone would wrap around Earth nearly 714 times.

With volume like that, why do lawyers—and like in Branhaven, the courts—want to mimic paper? The answer could simply be comfort with a familiar system. Bates stamping has been used for more than 100 years. It could also be a lack of understanding of the complexities of the technology itself by the collective legal profession. But as eDiscovery becomes more prevalent, and as more attorneys and law firms are sanctioned for failing to comply with overly burdensome and antiquated discovery requests, it will be interesting to see whether practitioners and the judiciary make adjustments to an evolving system.

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