Publications: E-Discovery Update - March 2011

Author: Heidi Goldwater, Litigation Technology Manager

Contents

• Judge Scheindlin Criticizes Government’s Failure to Produce Metadata as an “Inappropriate Downgrading of ESI”
• Courts Authorize Internet Service Providers and Web-Based Companies to Turn Over Identities Behind IP and Internet Addresses
• International E-Discovery: U.S. Discovery Sought in Aid of Foreign Litigation - Defeating Discovery Requires “More Than Angry Rhetoric”
• Tech Corner: “The CLOUD” What’s all the hoopla about?

Judge Scheindlin Criticizes Government’s Failure to Produce Metadata as an “Inappropriate Downgrading of ESI”
By Richard H. Tilghman IV

In a recent opinion addressing the production of electronically stored information (“ESI”) under the Freedom of Information Act (“FOIA”), prominent e-discovery jurist Shira Scheindlin of the United States District Court for the Southern District of New York provided another reminder that producing parties need to stand ready to produce metadata. National Day Laborer Organizing Network v. United States Immigration and Customs Enforcement Agency¹ involved an action under FOIA in which the plaintiffs requested electronic records from four federal agencies. The government produced documents to the plaintiffs in an unsearchable .pdf format with no metadata, leading to a dispute about the format of production. In a 25-page opinion, Judge Scheindlin held that the government’s production was inadequate because it failed to include metadata. As a result, the government was ordered to reproduce the data with 23 separate metadata fields.

Judge Scheindlin’s opinion is a must-read for e-discovery enthusiasts, but some of the relevant highlights include:

• In addition to ordering the government to reproduce the documents with metadata, the court required the government to bear the costs of the reproduction.
• The opinion states that “it is by now well accepted that when a collection of static images are produced, load files must also be produced in order to make the production searchable . . . .”
• The court noted that “metadata maintained by the agency as a part of an electronic record is presumptively producible under FOIA.”
• Judge Scheindlin emphasized that “[w]hether or not metadata has been specifically requested—which it should be—production of a collection of static images without any means of permitting the use of electronic search tools is an inappropriate downgrading of the ESI.”
• The opinion reiterates the importance of cooperation and communication between counsel to address e-discovery issues before production.

The opinion in National Day Laborer Organizing Network is believed to be the first in which the federal government has been ordered to produce metadata. It serves as another reminder that attorneys who fail to agree with the opposing party on the format for production of ESI bear the risk of the court imposing its own requirements.
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¹ No 10 Civ. 3488 (SAS), 2011 WL 381625 (S.D.N.Y. Feb. 7, 2011).

Courts Authorize Internet Service Providers and Web-Based Companies to Turn Over Identities Behind IP and Internet Addresses
By Emily M. Dierberg

Courts are increasingly faced with deciding whether to force internet service providers (“ISP”) or web-based companies to reveal the identities of their subscribers. The subscriber’s right to privacy and free speech are at issue in these situations. Two recent cases in the Northern District of California dealt with this issue.

In Collins, Inc. v. Does 1-1219, the plaintiff had a copyright on the motion picture at issue.¹ The plaintiff alleged each of the 1,219 Doe defendants reproduced and distributed the plaintiff’s motion picture on a peer to peer online media site, without the plaintiff’s permission. Because the peer to peer network was partially anonymous, the plaintiff did not know the Doe defendants’ names and addresses, but identified their ISPs. The plaintiff requested an order from the court allowing it to serve subpoenas on the defendants’ ISPs to obtain their identities, prior to the initial discovery conference.

The court noted it may authorize early discovery prior to a Rule 26(f) conference if “good cause” is shown. In evaluating whether a plaintiff has established good cause, the court examined whether the plaintiff (1) identified the Doe defendant with enough specificity that the court could determine the defendant is a real person who can be sued in federal court, (2) recounted the steps taken to locate and identify the defendant, (3) demonstrated the action can withstand a motion to dismiss, and (4) proved the discovery is likely to lead to identifying information that will permit service of process. The court found the plaintiff had shown good cause. He knew each defendant’s specific IP address, and the day each defendant allegedly engaged in infringing conduct. The plaintiff had adequately described the steps he took to locate and identify the defendants, including locating the IP addresses, the date the IP addresses were formed, and the date the IP address allegedly infringed on the plaintiff’s work. The plaintiff pled essential elements to a copyright infringement claim, and the subpoenas sought information likely to lead to identifying information. The court therefore allowed the plaintiff to issue subpoenas to the defendants’ ISPs and ordered the ISPs to preserve all subpoenaed information.

In another recent case, the owner of a trademark, filed suit against the defendant “David Barton,” the contact name for eBay, Inc. seller “buzzboysales,” for alleged infringement.² The plaintiff claimed the defendant knowingly sold or contributed to the sale of counterfeit versions of the plaintiff’s products. The plaintiff worked with law enforcement officials to determine the location and identity of “David Barton,” but that individual was not associated with the alleged infringing activity. The plaintiff moved for leave to conduct immediate discovery and serve subpoenas on eBay for information surrounding the profile and identity of “buzzboysales.” The court analyzed the standards referenced above and concluded the plaintiff had established “good cause” to allow for limited early discovery to identify the anonymous user defendant. The court reasoned that because the defendant was a seller on eBay, he/she clearly was a real person who could be sued in court. The plaintiff took measures to locate the defendant and adequately pled a cause of action. Finally, the plaintiff demonstrated a reasonable likelihood that its requested discovery would lead to the defendant’s identity. Accordingly, the court granted the plaintiff leave to subpoena eBay.

Collins and Specialized indicate courts’ willingness to allow parties to subpoena ISPs and website companies for their users’ contact information.

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¹ Collins, Inc. v. Does 1-1219, No. C 10-04468 LB, 2010 WL 5422569 (N.D. Cal. Dec. 28, 2010).
² Specialized Bicycle Components, Inc. v. Barton, No. C10-05725 HRL, 2011 WL 31268 (N.D. Cal. Jan. 5, 2011).

International E-Discovery: U.S. Discovery Sought in Aid of Foreign Litigation Defeating Discovery Requires “More Than Angry Rhetoric”
By Lisa C. Sullivan

There are potential perils and pitfalls of seeking e-discovery from international sources for use in U.S. litigation. Foreign litigants seeking e-discovery in the U.S. may confront speed bumps of their own. Early this year though, the Seventh Circuit, in an opinion by Judge Posner, attempted to provide some clarity in the case Heraeus Kulzer, GMBH v. Biomet, Inc.¹

The Heraeus Kulzer case was an appeal from orders of the district court denying applications brought by Heraeus Kulzer in U.S. federal court seeking discovery in aid of its suit for misappropriation of trade secrets pending in Germany. In that German lawsuit, Heraeus Kulzer alleged that it had disclosed certain proprietary information about its bone cement to a distributor so that the distributor could obtain required regulatory approvals. That distributor later entered into a joint venture with Biomet, a competitor of Heraeus Kulzer’s in the bone cement market. Soon enough, Biomet began selling a bone cement similar to Heraeus Kulzer’s product. Heraeus Kulzer alleged that Biomet had stolen its trade secrets.

Like many European legal systems, discovery in German lawsuits is not as extensive as U.S. discovery. Instead, as Judge Posner explained, a German litigant “cannot demand categories of documents from his opponent,” but instead is limited to “documents that he is able to identify specifically – individually, not by category.” This would likely hamper Heraeus Kulzer’s ability to develop its case; Heraeus Kulzer would be unable to identify specific documents about an (alleged) undercover theft of trade secrets.

Heraeus Kulzer sought to avail itself of discovery pursuant to 28 U.S.C. § 1782, which permits a federal district court, in its discretion, to order a person who “resides or is found in” the district to produce documents for use in a foreign legal proceeding. Indeed, as the court noted, the applicant “can obtain as much discovery as it could if the lawsuit had been brought in that [U.S. federal] court rather than abroad. But the district court denied Heraeus Kulzer’s application for discovery.

On appeal, Judge Posner warned of the potential for abuses inherent in a request that the U.S. federal courts order discovery for use in a foreign lawsuit. These potential abuses include:

• Seeking discovery in the U.S. that is available under the foreign venue’s discovery process, resulting in duplicative proceedings and an inference of harassment.
• Seeking discovery the foreign tribunal would not allow into evidence.
• “[S]wamping a foreign court with fruits of American discovery that would be inadmissible in an American court.”
• Seeking discovery that would impose an undue burden on the respondent. Judge Posner acknowledged that the expense of responding to discovery “can be enormous, especially now that we’re deep into the age of electronic discovery.”
• Seeking an “arbitrary advantage” in the litigation, where one party is able to avail itself of broad U.S. discovery, while the other party cannot.

The court found none of these abuses were present in Heraeus Kulzer’s request. Accordingly, the Seventh Circuit held that the district court, in denying the application for discovery, “committed two serious legal errors that vitiate[d] its exercise of discretion.”

First, the district court erroneously concluded that Heraeus Kulzer was seeking to circumvent German law. But there was “nothing to suggest that the German court would be affronted by Heraeus’s recourse to U.S. discovery or would refuse to admit any evidence” obtained in the U.S. The Seventh Circuit held, “[o]nce a section 1782 applicant demonstrates a need for extensive discovery for aid in a foreign lawsuit, the burden shifts to the opposing litigant to demonstrate, by more than angry rhetoric, that allowing the discovery sought . . . would disserve the statutory objectives.”

Second, the district court refused the discovery outright, without requiring the parties to meet and confer on the scope of the requested discovery – just like any other federal case. In fact, the court noted that Biomet had “refused to meet” with Heraeus Kulzer, a fact the court called “another example of its stonewalling.”

In the end, the Seventh Circuit remanded the case back to the district court, instructing it to consider the discovery requests “as it would any other discovery request in a complex case.” Based on Heraeus Kulzer, foreign litigants seeking discovery in the U.S. may find it worthwhile to become familiar with the scope of e-discovery.

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¹ Heraeus Kulzer, GMBH v. Biomet, Inc., No. 09-2858, 10-2639 (Jan. 24, 2011).

Tech Corner: “The CLOUD” What’s all the hoopla about?
By Heidi Goldwater, Litigation Technology Manager

If you have picked up any technology journal recently or seen any of the advertisements about new trends in computing, then you have probably heard of “the cloud.” What is “the cloud,” you may ask? Put simply, it means any applications, storage or infrastructure that are not hosted in a company’s data center. Instead, when these are hosted by a service provider over the Internet, they are said to be hosted in the cloud.

There are many variations of cloud computing, many of which you may already be familiar with. For example, if you have an Internet e-mail account with Gmail or Yahoo or post information and pictures to Facebook, then your data is technically in the cloud. Yes, it’s that simple.

There are many categories of cloud computing. Probably the oldest and most widely known category is “Software As A Service” or “SAAS” computing. This refers to a third party who hosts an application that can be accessed from anywhere and shared between many parties. Some examples of this include Google Docs, Gmail, and Salesforce.com, to name a few. While the term “the cloud” is new, the application is not. “SAAS” applications were previously called Application Service Providers or “ASPs.” Although the names have changed, the concept remains the same. Other cloud categories include Infrastructure As A Service or “IAAS” (i.e., leasing a physical server in a remote location that is accessed via the Internet) and Storage As A Service (i.e., a company or firm may host the application internally but all data generated from that application is hosted by a third party). Storage As A Service is probably the most common of cloud applications today.

Why go to the cloud? There are multiple reasons, with cost often topping the list. By implementing cloud-based applications, organizations can increase the types of systems that users have access to while avoiding the investment in hardware, software and infrastructure that many of these systems require. Cloud computing gives the user additional applications at a fraction of the cost. Not only does this reduce a company’s costs, it also allows a company to do more with less staffing.