Court Suppresses E-discovery in Criminal Investigation for Government’s Bad Faith Seizure of Harddrives

Court Suppresses E-discovery in Criminal Investigation for Government’s Bad Faith Seizure of Harddrives

U.S. v. Metter, No. 10-CR-600 (DLI), 2011U.S. Dist. LEXIS 155130 (E.D.N.Y. May 17, 2012)


In this securities fraud action, the government had asserted that the defendant Metter had furthered the fraudulent scheme using his home computers, and after obtaining a valid warrant, seized four hard drives, among other items.  The government also seized 61 hard drives, pursuant to a valid warrant, from two companies, and also obtained email from the internet search providers of Metter and other co-defendants.  The Government made images of the hard drives and promptly returned them to their respective owners.


In November, 2010, the government stated that it intended to provide the defendants with image copies of the hard drives by January, 2011.  At that point, the government had not begun a privilege review, and could not estimate when the review would be completed.


At a status conference in February, 2011, the government stated that it would provide a list of computers and emails seized by March, 2011.  It also stated that it intended to produce all imaged evidence (without review) to all defendants, and then later conduct a privilege review.  The government would also set up a “taint team” to review the hard drives and email accounts for privilege issues.  Metter’s attorney expressed concern about the volume of confidential, irrelevant information of his client which would be made available to the other defendants, suggesting that each attorney review his clients’ material to weed out nonresponsive information.  The government objected to defendants’ counsel making determinations that information was outside of scope.  The court ordered the government to produce an inventory of the computers seized, and for defense counsel to review their clients’ computers for what they believed to be irrelevant or privileged evidence.


The government’s February 28, 2011 status report stated that the defendants could inspect the hard drives at the government’s office and lodge objections to evidence outside the scope of the warrant.  However, it also indicated that any attorney could request a copy of any other seized hard drive.  Metter immediately objected to the dissemination of the information on the hard drives without any review.


Fifteen months after the seizure, the government had still not conducted its review of the seized evidence to determine whether any information was outside the scope of the warrant, and had not determined when its privilege review would be complete.


Metter filed a motion to suppress the evidence, stating that the government’s significant delay violated the Fourth Amendment.  The government argued that seizure and off-site review of evidence was permissible under the Fourth Amendment, defendants had not suffered harm because the government had immediately returned the evidence, and that the delayed review was reasonable.


The court found that the reasonableness of the delay between seizure and review of electronic evidence required a case-by-case factual analysis, but that under the facts of this case, the government’s seizure was unreasonable.


The court first observed that as an image of an electronic document contained the same information as the original documents, the retention of images by the government raised the same privacy concerns as retention of the original documents.  Documents, both paper and electronic, raised different concerns than other types of evidence, because of the volume of information.   Thus, courts permitted the government to examine documents which could be outside the scope of the warrant to determine whether they fell within the scope of the warrant.  Similarly, the complexity of electronic evidence led courts to give the government some leeway in searching for relevant evidence, including the ability to search the evidence offsite.


The court acknowledged that the warrants obtained by the government and the imaging process itself were reasonable.  The problem was the government’s delay in beginning review of the evidence.  As of the date of the hearing, the government had no plan to begin review of the evidence.


The government’s retention of all imaged electronic documents, including personal emails, without any review whatsoever to determine not only their relevance to this case, but also to determine whether any recognized legal privileges attached to them, is unreasonable and disturbing.


Id. at *29. The court also found fault with the government’s intent to release images of the hard drives to the other defendants:


The Court agrees with Defendant that the release to the co-defendants of any and all seized electronic data without a predetermination of its privilege, nature or relevance to the charged criminal conduct only compounds the assault on his privacy concerns. It underscores the government’s utter disregard for and relinquishment of its duty to insure that its warrants are executed properly.


Id. at *29-*30.


Suppression of evidence is warranted when the government effects a “widespread seizure” of items outside the warrant’s scope, and it acts in bad faith.  The first prong of the test was met by the government’s seizure of all information contained on the drives and the email accounts.  The government’s bad faith was demonstrated by its promises to review the evidence, and its failure to do so after requests by both defense counsel and the court.  Metter’s motion to suppress the electronic evidence was granted.


What is Predictive Coding?

What is Predictive Coding?

Moore v. Publicis Groupe, No. 11 Civ. 1279 (ALC)(AJP), 2012 U.S. Dist LEXIS 23350 (S.D.N.Y. Feb. 24, 2012)

Magistrate Judge Peck had previously written an article advocating the use of predictive coding in the appropriate case, but had observed that many attorneys were reluctant to use the technology absent a judicial opinion approving its use. In Moore, Judge Peck approved its use.

The case involved a suit by plaintiff female employees of defendant advertising agency, alleging gender discrimination in pay and promotion practices, as well as unfair terminations, demotions and job reassignments during a corporate reorganization. Although plaintiffs sought to bring some claims as a “collective action”, they had not made any motions to that effect.

At the initial discovery conference, defendant MSL indicated that the parties were discussing use of predictive coding to cull down the over three million electronic documents, but plaintiffs had concerns over its use. The court rejected MSL’s early proposal to review only the top 40,000 documents after the computer had been fully trained, noting that total production would depend upon what the statistics revealed for the results.

After some disputes regarding custodians, MSL proposed to phase the discovery, and complete the first phase before beginning the second. Noting plaintiffs’ concerns regarding sufficient time to complete discovery, the court agreed to extend the deadline in order to pursue the phased approach. Accordingly, the court agreed to delay utilization of certain ESI sources to the second phase to give the plaintiffs time to provide more information to the court regarding those data sources.

The parties agreed to take a random sample of the entire email collection at the 95% confidence level to provide a “seed set” of 2,399 documents to train the software. The review would be conducted by senior attorneys. MSL agreed to provide the documents to plaintiffs, who could add two more sets of issue tags, which would be incorporated into the system coding. Four thousand additional documents would be generated through keyword searches from both defendants and plaintiffs, and all non-privileged documents comprising the seed set would be provided to plaintiffs, whether relevant or not.

The court agreed to seven rounds of iteration; i.e. in each round, 500 documents would be reviewed to determine whether the computer was returning relevant documents. After the seventh round, a random sample (2,399) of document discards would be reviewed to insure that the discards were, in fact, not relevant. The court reserved the right to order additional iterative rounds if plaintiffs objected to the results.

The court then discussed several objections by plaintiffs to its earlier rulings. First, plaintiffs objected that the court’s acceptance of predictive coding allowed defendants to escape certification under Rule 26(g) that their clients’ document production was “complete” and “correct”. The court responded that no attorney could certify that in a document set involving over three million emails that their production was “complete;” however, the rule did not require that. The Rule 26(g)(1)(A) certification applies only “with respect to a disclosure,” which actually applied to Rule 26(a)(1) disclosures involving such information as witnesses or exhibits used to support claims or defenses. Rule 26(g)(1)(B) certifications apply to discovery responses, and did not require completeness, but incorporated the Rule 26(b)(2)(C) proportionality principle.

Plaintiffs’ objection that the court’s acceptance of predictive coding was contrary to Evidence Rule 702 was misplaced, as the rule related to admissibility of evidence at trial, not the process on how documents were searched for and found during discovery.

Plaintiffs’ concerns about the reliability of predictive coding were premature. The court noted that such determinations were not possible until the process was actually run. Proportionality concerns could not be addressed until the number of relevant documents was determined, the nature of the results was evaluated (would highly relevant “smoking guns” be found), or plaintiffs decided whether to seek class certification.

In discussing some lessons for the future, the court noted the results of several studies and projects demonstrating the fallacy that manual review of documents was the “gold standard,” noting the greater accuracy and efficiency of computer-assisted review. Issues with keyword searching were noted—they tended to be over-inclusive and not very effective. The court concluded that computer assisted coding should be used in appropriate cases.

The court also noted the parties’ agreement to use predictive coding in the instant case was an important factor in the court’s decision to allow it, as well as the defendants’ transparency, which the court advocated that parties in future cases should at least discuss.

Other observations made by the court included the inability of determining when review and production could stop until the predictive coding computer had been trained and the results quality control verified. In addition, staging of discovery by starting with sources of data most likely to be relevant is a means of controlling discovery costs, and judges should be willing to grant discovery deadline extensions if additional stages were necessary. Counsel should also utilize their clients’ knowledge about the opposing parties’ systems (if the case involves employment disputes, or cases in which the parties had had extensive knowledge of each other). Finally, the court found it helpful to have the parties’ e-discovery vendors present when ESI issues were discussed.

The court concluded that “computer-assisted review is an available tool and should be seriously considered for use in large-data-volume cases where it may save the producing party (or both parties) significant amounts of legal fees in document review.”

Judge Orders Forensic Examination of ATTORNEY’s hard drive

Judge Orders Forensic Examination of ATTORNEY’s hard drive

Commercial Law Corp. v. FDIC, No. 10-13275, 2012 U.S. Dist. LEXIS 51437 (E.D. Mich. Apr. 12, 2012)

The Plaintiffs in the above captioned case were attorneys attempting to recover attorney’s fees for services rendered to a bank before the bank was taken over by the FDIC in receivorship. Plaintiff asserted that it had valid liens on two branches of the bank, and that documents relating to these liens were executed by the bank on November 1, 2009, five days before the bank went into receivership.

Plaintiff had sent an email in January 2010 to the bank’s board of directors containing draft lien documents. This email had been produced in discovery, and the attachments were not signed by either plaintiff or the bank’s directors.

Defendant contended that it had reason to believe that the lien documents were prepared in January, 2010, after the bank had gone into receivership, and sought a forensic image of the plaintiff’s hard drive to determine when the documents were created. The magistrate judge granted defendant’s motion to compel plaintiff to produce the forensic image, setting forth detailed instructions on the process in order to protect plaintiff’s privileged files.

The district court rejected plaintiff’s arguments that a finding of actual fraud was necessary in order to compel the forensic search. The court stated that “[i]f the Court had before it ‘actual proof of an alleged fraud,’ as Plaintiff contends is required for the Court to grant the computer inspection, the forensic search of Plaintiff’s computer would serve no purpose.” Nevertheless, “extraordinary circumstances” existed which justified the forensic search.

The date that the Plaintiff executed the lien was “clearly relevant to a defense against Plaintiff’s attorney lien claim.” Rule 26’s limitation on the discovery of nonprivileged material was followed by the magistrate’s detailed instructions which were designed to protect the privileged material. The request for the image was based on more that a mere “hunch.” The FDIC had reason to believe that the documents were created at a later date and then backdated.

The fact that defendant had not originally requested metadata in its initial discovery requests was not dispositive, as defendant did not learn of the existence of the January email until it deposed the recipient of the email, well after the submission of the initial discovery requests.

The district court accordingly overruled plaintiff’s objections to the magistrate’s order.

If you could change any rule of federal procedure, what would it be, and why?

If you could change any rule of federal procedure, what would it be, and why?

The University of Denver Law Review recently published an issue consisting of articles responding to the question, “If you could change any rule of federal procedure, what would it be, and why?”

Several authors took up the charge by addressing e-discovery, while the a few articles were focused on pleadings, and offers of judgment. The e-discovery articles include a piece by the directors of the Electronic Discovery Institute titled “Mandating Reasonableness in a Reasonable Inquiry”; a short essay by practitioner Daniel Girard titled “Limiting Evasive Discovery: A Proposal for Three Cost-Saving Amendments to the Federal Rules”; and an article from two Denver area practitioners titled “Proportional Discovery: Making it the Norm, Rather than the Exception.” The theme seems to center around making E-discovery less expensive.

Other notable contributions include a piece from Judge Lee Rosenthal, Chair of the Judicial Conference Committee on Rules of Practice and Procedure (whose contribution also mentions e-discovery); Judge Mark Kravitz, Chair of the Civil Rules Advisory Committee; an article from the directors of the Institute for the Advancement of the American Legal System; and contributions from Professors Robert Bone, Stephen Subrin, A. Benjamin Spencer, and Jeffrey Stempel.

The articles can currently be found in the Current Issues section of the Law Review’s web site, located here (note that this link may soon become outdated.)

UR Journal of Law & Technology survey issue on e-discovery

The Journal of Law and Technology, an online law review published by the University of Richmond law school, has published its Spring 2007 survey issue on electronic discovery. A link to that issue, as well as the other e-discovery survey issues, is available here.