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Wednesday, December 11, 2013

2013 Year in Review: Courts Get “Back to Basics” as Rule Amendment Efforts Swell

MINNEAPOLIS – Dec. 11, 2013 – Unlike 2012 with the landmark Da Silva Moore case, 2013 was all about getting back to basics in ediscovery – as the majority of ediscovery judicial opinions re-emphasized foundational legal principles. This was a key finding from the yearly analysis of reported 2013 ediscovery opinions and notable ediscovery themes by Kroll Ontrack, the leading provider of ediscovery and data recovery products and services.

In the past year, Kroll Ontrack experts summarized 61 significant state and federal judicial opinions from 2013 related to preservation, collection, review and production of electronically stored information. There were five major categories that arose most commonly in these opinions:

  • 28 percent of opinions focused on preservation and spoliation, namely questioning when parties had a duty to preserve and whether spoliation had occurred.
  • 23 percent of opinions dealt with disputes over production of data.
  • 18 percent of opinions discussed procedural issues, such as search methodologies and predictive coding.
  • 18 percent of opinions issued orders regarding sanctions for spoliation, production disputes, and noncompliance with court orders.
  • 13 percent of opinions addressed cost considerations, such as cost shifting and taxation of costs.

“Since 2000, Kroll Ontrack has tracked salient ediscovery case law,” said Michele Lange, director of ediscovery marketing, Kroll Ontrack. “What is notable about this year is the fact that many of these cases provided standards that either aligned with the proposed amendments to the Federal Rules of Civil Procedure (FRCP) or further fueled the debate over the proposed amendments. With the groundwork laid in 2013, the upcoming year is going to be an exciting time for legal professionals, as ediscovery practices transform from an art to more of a science.”

Trends in 2013 Case Law
Continued divergence as to when the “duty to preserve” is triggered
Courts in 2013 diverged on when the duty to preserve is actually triggered. For example, the court in In re Pradaxa (Dabigatran Etexilate) Prods. Liab. Litig., 2013 5377164 (S.D. Ill. Sept. 25, 2013) applied a stricter interpretation of the duty than the generally accepted Zubulake test. In this suit, the defendant drug manufacturer argued relevant documents were destroyed according to corporate policy at least three months before they received the first demand letter from a plaintiff’s attorney. The Plaintiffs’ Steering Committee (PSC) countered that there were other events predating the destruction of the documents that made litigation “reasonably foreseeable.” Ultimately, the court ruled in favor of the defendant, finding that the duty to preserve was only triggered when the demand letter was received and the prospect of litigation was imminent. However, the court declined to state whether this stricter preservation test was the governing standard in the Seventh Circuit by noting that the defendant did not violate its preservation duty under either the “reasonably foreseeable” or “imminent litigation” test.

Production and procedural issues increasingly hinge on proportionality
Courts showed a renewed interest in proportionality to resolve complex disputes over production or procedure. In Apple, Inc. v. Samsung Elecs. Co., Ltd., 2013 WL 4426512 (N.D. Cal. Aug. 14, 2013), the court evoked the “often ignored discovery principle” of proportionality to reject the defendant’s motion to compel production of granular financial data that would require a “herculean effort” by the plaintiff and would greatly outweigh the benefit to the defendant.

Proportionality was also a key factor in disputes relating to search methodologies. In re Biomet M2a Magnum Hip Implant Prods. Liab. Litig., 2013 WL 1729682 (N.D. Ind. Apr. 18, 2013), the court applied the principle of proportionality to analyze a search methodology leveraging both keyword search and predictive coding. In this case, the PSC argued that the defendants should have used only predictive coding to cull a 19.5 million document universe. The court disagreed with PSC and found that it would cost the defendants millions of dollars to start over with predictive coding, which in the eyes of this court, would sit “uneasily with the proportionality standard in Rule 26(b)(2)(C).”

“As efforts to amend the FRCP progress, many courts considered proportionality to resolve increasingly complex disputes,” added Lange. “Going forward, discovery will increasingly be conditioned on the notion of what is proportional to the case at hand.”

Courts differ on the level of culpability required to justify sanctions
In 2013, courts deliberated the appropriate standard for imposing sanctions. Potential amendments to the FRCP further fueled this debate, as proposed Rule 37(e) would require courts to find that evidence was deleted in bad faith and caused “substantial prejudice” to warrant severe sanctions. Many courts applied a similar standard in 2013. For example, in Herrmann v. Rain Link, 2013 WL 4028759 (D. Kan. Aug. 7, 2013), the court found that the movant failed to establish information was deleted in bad faith, and declined to presume prejudice or order sanctions when the destruction was “merely willful.”

Other opinions in 2013 criticized the proposed rule and favored a more liberal culpability standard. The strongest opposition came from U.S. District Judge Shira Scheindlin in Sekisui Am. Co. v. Hart, 2013 WL 4116322 (S.D.N.Y Aug. 15, 2013). In Sekisui, Judge Scheindlin reversed an earlier recommendation by Magistrate Judge Frank Maas that applied a standard similar to Herrmann. Instead, Judge Scheindlin found the plaintiff’s willful destruction of evidence warranted a presumption of prejudice and ordered an adverse inference with monetary sanctions. Notably, the opinion also provided commentary on the proposed Rule 37(e), noting that it would place a significant burden on the “innocent party” to prove spoliation warranted sanctions.

Cost Awards Can Include Predictive Coding Fees
Cost disputes remained prevalent in 2013, and one opinion opened the door to awarding costs for predictive coding. In Gabriel Techs. Corp. v. Qualcomm, Inc., 2013 WL 410103 (S.D. Cal. Feb. 1, 2013), the court found that the plaintiffs pursued baseless claims in bad faith and awarded the defendants over $12 million in attorney’s fees under 35 U.S.C. § 285. Notably, the award included nearly $3 million for leveraging predictive coding, which, in the eyes of the court, allowed the defendants to “undertake a more efficient” document review process.

About the year in review research:
Findings are based on 61 prominent ediscovery opinions selected between January and December 2013. Each opinion selected was summarized, categorized and added to an ongoing database of ediscovery case law summaries, available at:

About Kroll Ontrack Inc.
Kroll Ontrack provides technology-driven services and software to help legal, corporate and government entities as well as consumers manage, recover, search, analyze, produce and present data efficiently and cost-effectively. In addition to its award-winning suite of software, Kroll Ontrack provides data recovery, data destruction, electronic discovery and document review. For more information about Kroll Ontrack and its offerings please visit: or follow @KrollOntrack on Twitter.

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Media Contact: Kristin Husom, 952-516-3581,