E-Disc Law Blog

In Chen v. Dougherty (W.D. Wash. 2009), the Court found that an attorney's "inhibited ability to participate meaningfully in electronic discovery," required a reduction in that attorney's reasonable hourly rate for purposes of an attorney's fee award.

The discovery at issue involved 50,000 pages of paper documents that were produced TO the subject attorney.  The Court noted that both parties "failed to put together a proper discovery plan concerning Electronically Stored Information," and that the attorney receiving the documents "contributed to the resulting discovery dispute by failing to offer search terms for the delivery of relevant ESI." 

The Court decided a reduction of fees was appropriate because the attorney's, "inhibited ability to participate meaningfully in electronic discovery tells the Court that she  has novice skills in this area and cannot command the rate of experienced counsel."

In Superior Production Partnership v. Gordon Auto Body Parts Co. (S.D. Ohio 2009) the Court ruled that sanctions were not appropriate absent evidence that any relevant information had been destroyed.  The case involved predatory pricing and Superior Production d/b/a PBSI brought a motion for sanctions based upon the defendants failure to institute a legal hold and failure to conduct a thorough search for relevant information.

The Defendants had not instituted a formal legal hold and their search for responsive documents was limited to one database.  The intial search did not include any emails or employee hard drives.  Despite requests from PBSI, the Defendant had not instructed any employees to preserve relevant information while the litigation was pending.   When this search resulted in a suspiciously small number of relevant documents, the Plaintiffs brought the motion for sanctions seeking the prodcution of employee hard-drives and to shift the costs of foresenically examining them to determine whether any relevant information was deleted.  In the alternative, PBSI sought an adverse inference instruction based upon the intentional or negligent destruction of relevant information.

The Defendant argued that its standard document retention policy was sufficient to preserve relevant documents. The Defendant also pointed out that after the initial production, and after one of its key employees was deposed because of the limited number of documents produced, the Defendant issued a formal litigation hold notice to all employees.  After a further search of email files and employee hard drives, some additional relevant documents were found and produced. 

The Court began by noting that the Defendant's duty to preserve and produce relevant evidence was triggered by the filing of the lawsuit.  Failure to meet that duty could result in sanctionable conduct.  However, the Plaintiff failed to produce any evidence that relevant information had actually been destroyed by the Defendant's actions or its failure to act.  Because of that lack of evidence, the Court declined to award either sanction the Plaintiff sought. 

However, the important lesson is that the Court noted direct evidence that relevant evidence has been destroyed is often not present in sanctionable cases and discussed two alternative methods a party seeking sanctions can meet its burden.  FIrst, "a certain group of relevant documents may exist only back to a particular point in time, and not beyond, creating an inference that the same documents did exist for earlier time periods but have simply been deleted."  And second, "a party suspecting document destruction may show that it is the routine practice either of the defendant or other companies engaged in a similar business to maintain certain types of documents, but that no such documents have been produced by this defendant."

Regardless of the outcome, the Defendant's actions in this case were questionable at best.  The Defendant clearly played with fire here by not instituting a legal hold.  The Court left the Plaintiff the option of bringing the motion again in the future should it find any direct evidence of spoliation.  The limited extent of the search also could have led to sanctions however this error was rectified by the subsequent steps to conduct a proper search of all potential sources of ESI. 

Another important point is the Defendant's standard document retention policy.  While the Defendant argued its document retention policy would prevent the destruction of relevant information, the opposite is more likely.  The duty to preserve is often breached through the routine destruction of relevant documents when a party fails to suspend its document retention programs.

At least according to one court, the answer is no it does not.  The Stored Communications Act (“SCA”) generally prohibits a “person or entity providing an electronic communication service to the public” from “knowingly divulging to any person or entity the contents of a communication while in electronic storage by that service.” It also prohibits a “person or entity providing remote computing service to the public” from “knowingly divulging to any person or entity the contents of any communication which is carried or maintained on that service.”

An “electronic communications service” (“ECS”)is defined as “any service which provides to users thereof the ability to send or receive wire or electronic communications.”  A “remote computing service” (“RCS”)is defined as “the provision to the public of computer storage or processing services by means of an electronic communication system.”

Depending upon how the third party is defined, there are exceptions to the general prohibition of disclosure.  An ECS may divulge commications with the “lawful consent of the originator or an addressee or intended recipient of such communication.”  An RCS may divulge a communication with the “lawful consent” of the subscriber. 

In Flagg v. Ciry of Detroit, et al. (E.D.Mich. 2008) the court ruled that the SCA does not prevent the discovery of text messages stored by a third party service provider.  The case involved a wrongful death claim against the City of Detroit and several public officials and alleged a coverup of the events leading to that death.  The Plaintiff filed a third party subpeona seeking the production of text messages in the custody of SkyTel which had previously provided text messaging services to the City and its employees.  At the time of the motion that contract had expired but SkyTel maintained an archive with the only known copies of those text messages.

Several of the Defendants, including the City and key personnel opposed the motion on the grounds that such a disclosure violated the SCA.  They specifically pointed to the fact that the SCA did not provide an exception for a court order or subpeona.  The Defendants argued the only relevant exception was for disclosure with the lawful consent of the subscriber, the originator, or the recipient and then stated that they were unwilling to give such consent. 

A key point in this ruling is that the court refused to address the issue of whether the production of those text messages via a third party subpeona would violate the SCA and even went so far as to suggest that the third party would violate the SCA if it produced the text messages.  But the court specifically avoided ruling on that issue.  Instead, the court analyzed whether production via a Rule 34 request for production would violate the SCA. 

Rule 34 requires a part to produce documents not only in its possession but those under its control.  The court analyzed the definition of “control” in case law and found several examples of documents found to be under a party’s “control.”  The court noted that documents under a party’s control include: (1) those which the party has a contract conferring a right of access; (2) documents in the possession of a party’s agent; (3) a corporation has control over documents in the possession of one of its officers or employees; (4) a corporation has control over materials its officers or employees has a legal right to obtain; and (5) records maintained by a third party on the company’s behalf. 

The court found that the City clearly had control over the text messages in SkyTel’s possession on a number of grounds.  The City failed to provide any evidence that its contract did not provide it with the right to access the text messages as the service subscriber.  Even if the text messages were not accessible because of the contract, the City had control over the information because its officers and employees were originators or recipients of the messages and thus had the right to authorize access to the text messages. 

The court then turned to the issue of whether the SCA prohibited the production of those messages.  The court noted that under Rule 34 the text messages would be produced to the City, not the Plaintiffs and that the City would be obligated under Rule 34 to produce relevant non-privileged text messages.  The Defendants’ argument that they refused to give consent to disclosure was irrelevant because Rule 34 required the Defendants to produce relevant non-privileged documents within their control and the text messages in SkyTel’s possession were within the City’s control. 

This left the only issue as what type of consent did the SCA require?  If the service was an RCS which provides “computer storage,” then the consent of the subscriber to the service is sufficient.  The legislative history described an RCS as serving the function of a “virtual filing cabinet.”  If the service was an ECS which provides “electronic storage,” then the consent of the originator or recipient is necessary.  The statute defines ”electronic storage” as “any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof,” or “any storage of such communication by an electronic communication service for purposes of backup protection of such communication.” 

The court ruled that the present services provided by SkyTel were the basis for characterizing the consent required.  Remember, the contract for text messaging services had expired previous to the case so the text messages were not stored on a temporary basis.  The text messages in SkyTel’s possession were the only known copy, thus the court ruled they could not qualify as backups.  

Given the current storage of the text messages and their unique status, the Court found that the text messages were being held in an RCS “virtual filing cabinet,” and the only consent required was that of the City.  The Court also noted that even if the text messages were in an ECS, the City was required to produce them because its officers and employees were originators or recipients who could consent to their release under the SCA.

So what did we learn? FIrst, the argument that a third party has the documents and could produce them if we authorized it but we refuse to give that authorization does not work.  Never tell a court, “I could get it if I want to but I don’t so I won’t.”  Rule 34 requires a party to produce documents under its control.  It didn’t help that in a previous motion in opposition to the third party subpeona, SkyTel suggested to the Court that a Rule 34 motion would be an appropriate method of producing the documents. 

An interesting aside here, the court spent a substantial amount of space in a footnote chastizing the attorney for at the time Detroit Mayor Kilpatrick, one of the individual defendants, who apparently sent a letter to SkyTel seeking assurance that it would not produce any text messages in response to civil discovery.  So another lesson might be, don’t tell a third party not to comply with its discovery obligations.

Second, at least according to this court, a third party could violate the SCA if it produced text messages covered by the Act in a method that does not comply with an exception to the general prohibition against disclosure.  Third parties must be careful anytime they are served with such a subpeona and realize that there could be statutes prohibiting the disclosure of such information that could expose them to criminal and civil liability if they comply.   They must take reasonable steps to insure the production of that information does not violate any state or federal laws.

More importantly, other jurisdictions have interpreted the act differently than this court.  See Quon v. Arch Wireless Operating Co., 529 F.3d 892 (9th Cir. 2008).The facts of each particular situation will determine whether or not a third party violates the SCA by producing information in its possession.