Insurance Defense Blog

Discovery of electronically stored information (ESI)

I. Victor Stanley, Inc. v. Creative Pipe, Inc ., 2008 U.S. Dist. Lexis 42025 (D. Md. May 29, 2008)

Held: That assertions of a/c privilege and work product immunity regarding 165 electronic documents were waived by the voluntary production of the documents to plaintiff by defendants.

Court noted that defendants originally requested that the Court approve a "clawback agreement" under Hopson v. Mayor of Baltimore , 232 F.R.D. 228 (D. Md. 2005), but later withdrew that request when the discovery deadlines were enlarged by four months. It is essential to the success of the use of "clawback agreements" in avoiding waiver that the production of inadvertently produced privileged electronic data "must be at the compulsion of the court, rather than solely by the voluntary act of the producing party, and that the procedures agreed to by the parties and ordered by the court demonstrate that reasonable measures were taken to protect against waiver of privilege and work product protection." The Hopson case tells you how to develop a factual record that would permit a non-waiver agreement to be approved by the Court. (There is a proposed Fed. R. Evid. 502 before Congress which would protect against waiver in these circumstances but it has not been passed into law yet.)

Court stated that 4th Circuit appears to be heading for the "strict approach" to waiver based on inadvertent production, namely, "there is a waiver because once disclosed, there can no longer be any expectation of confidentiality . . . ."   Even under the "intermediate approach", waiver would have been imposed, because the defendants here did not create a record that would support a finding of inadvertent disclosure.

The intermediate test requires the court to balance the following factors to determine whether inadvertent production of attorney-client privileged materials waives the privilege: (1) the reasonableness of the precautions taken to prevent inadvertent disclosure; (2) the number of
inadvertent disclosures; (3) the extent of the disclosures; (4) any delay in measures taken to rectify the disclosure; and (5) overriding interests in justice.

Judge Grimm seems to be saying that to make such a showing, a party essentially needs expert testimony from ESI specialists to discuss the reasonableness of the keyword searching methods and verification sampling.

Key quote:

The message to be taken from O'Keefe, Equity Analytics, and this opinion is that when parties decide to use a particular ESI search and retrieval methodology, they need to be aware of literature describing the strengths and weaknesses of various methodologies, such as The Sedona Conference Best Practices, supra, and select the one that they believe is most appropriate for its intended task. Should their selection be challenged by their adversary, and the court be called upon to make a ruling, then they should expect to support their position with affidavits or other equivalent information from persons with the requisite qualifications and experience, based on sufficient facts or data and using reliable principles or methodology.

For those understandably concerned about keeping discovery costs within reasonable bounds, it is worth repeating that the cost-benefit balancing factors of Fed. R. Civ. P. 26(b)(2)(C) apply to all aspects of discovery, and parties worried about the cost of employing properly designed search and information retrieval methods have an incentive to keep the costs of this phase of discovery as low as possible, including attempting to confer with their opposing party in an effort to identify a mutually agreeable search and retrieval method. This minimizes cost because if the method is approved, there will be no dispute resolving its sufficiency, and doing it right the first time is always cheaper than doing it over if ordered to do so by the court.

II. Continental Casualty Co. v. Under Armour, Inc ., 537 F.Supp. 2d 761 (D. Md. Feb. 13, 2008)

Held: Insurance company waived attorney-client privilege and work product by posting information on a section of its claims website which it had been accessible to the plaintiff's insurance broker. Plaintiff's broker downloaded the information and gave it to the plaintiff, which was a disclosure entirely outside the discovery process. Since the broker is the agent of the plaintiff insured, disclosure to the broker waived both the a/c privilege and the work product doctrine. Disclosure to an agent is tantamount to disclosure to the principal.

This opinion suggests that the better practice is to caption all of your status letters and evaluations to the insurer as privileged material, to flag potential privilege issues.  With insurers moving towards paperless files and remote access, an attorney can no longer be sure that third parties will not somehow be inadvertently given access to the file.

III. Hopson v. Baltimore, 232 F.R.D. 228 (D. Md. Nov. 22, 2005)

This opinion tells you how to set up the record to support a "clawback agreement" that
will work, at least until the new Fed. R. Evid. 502 is passed by Congress.

IV. Nuts and Bolts

A. Guidelines for discovery of ESI- from the U.S. Dist. Court for the District of Kansas

I've seen this highly recommended as a good 3 page summary of counsel's discovery obligations regarding ESI. It also has an appendix that outlines what you should be prepared to discuss in an ESI conference.  (Thanks to Jim Calloway.)

The suggested ESI protocol for the U.S. District Court for the District of Maryland is somewhat longer.

B. Possible consultants to use

Sensei Enterprises in Fairfax, Virginia

Kroll Ontrack

The Changing Legal Profession

A couple of good articles have come to my attention about the changing legal profession.  First, there is a good retrospective paper available as part of the "Virtual Law Library" on the D.C. Bar website:

The Changing Legal Profession, by Abe Krash.  Abe Krash practiced for 50 years with Arnold & Porter.  Here's a quote:

As Judge Rifkind noted, “an apprenticeship under a good master” is a critical part of learning the craft of lawyering. In the past, when firms were smaller, partners knew many of the associates, and they had an interest in training them for the reason that a goodly number of associates would become partners in the future. However, as to many associates with whom they now work, partners do not have such an interest. As I have noted, the turnover rate of associates at most large firms is extremely high, and only a handful of associates will be elevated to partnership. There is accordingly a diminished incentive for partners personally to invest valuable time in training associates who will leave the firm. A partner may understandably ask: why should I devote a lot of effort to training this associate when he or she will be gone from the firm in a year or two?

Coincidentally, there is a recent article in Findlaw, "Junior Associates - The State of the Legal Profession",which states at one point:

The training and loyalty of junior associates is closely tied to the issue of high salaries. Lack of "real world" legal training haunts most junior associates, who are routinely assigned to tedious document review projects.

Training a highly-paid first year associate who will most likely move on in a couple of years is a dilemma faced by many firms. According to the panel, 78% of lawyers are leaving their firms after only 1 or 2 years.

Impact of Medicare liens on settlements

An article on Medicare Reimbursement Problems was recently published in For the Defense.  One of the authors has a copy of the article posted on his firm website.  The article details the issues, but unfortunately no easy solution is offered.  The authors say that for now, the "only workable solution" is to put money in reserve for the estimated Medicare reimbursement.

DC Superior Court to fast track auto cases

The DC Superior Court is implementing new fast track Scheduling Orders this fall for car accident cases only. 

The fast track is identified as "V" for "vehicle."

Key changes:

1. For all car accident cases, the Pretrial Date and the Mediation Date will be set at the Initial Status Conference.  Accordingly, TRIAL COUNSEL's calendar must be available to whomever is attending the Initial Status Conference (given that trial counsel MUST attend the Pretrial Conference).  Whoever attends the Initial Status Conference needs to have the trial counsel's calendar and must be able to interpret the calendar on the fly.

2. Track V1 and Track V2 are the same as the current Track 1 and 2 cases. Track V1 Fast and Track V2 Fast will be used for cases where no summary judgment will be filed. If you think that there is ANY possibility that you may file such a Motion, you SHOULD NOT agree to one of the Fast tracks. The Court will be very reluctant to grant a continuance or reschedule Pretrial Conferences. A compelling reason will be needed to obtain Track 3.

3. Please note that under the new procedures, there is very little time for a Rule 16 meeting and preparation of pretrial materials between Mediation and the Pretrial Conference.

Specimen Track "V" scheduling orders are Download specimen_track_v_scheduling_orders.pdf .

Recent changes to D.C. Superior Court Rules 5 and 16

SCR 5 has been changed with regard to when a Certificate Regarding Discovery is to be filed.  Now, it is only to be filed when a motion relating to discovery is filed, and the certificate is to detail all the discovery to date as of that time.  SCR 16 has been changed to make mandatory the attendance at pretrial conferences any persons whose presence is necessary to settle a case, unless excused.  The old rule allowed availability by phone.  Download order_amend_scr_civil_5_and_16_082107.doc

Bell Atlantic v Twombly -- the death of notice pleading?

Ted Frank at Point of Law was early to recognize the import of the May 21, 2007 decision in Bell Atlantic v. Twombly, 127 S.Ct. 1955 (2007).  A longer look at the decision was taken in Dodson, Pleading Standards After Bell Atlantic Corp. v. Twombly, 93 Va. L. Rev. In Brief 121 (July 9, 2007), which gives a thorough overview and will convince you that it is worth your while to read the decision.  (Thanks to the SW Virginia Law Blog for the link to the Dodson article.)

It does now appear that the decision will have a major effect on notice pleading rules.  As of today, the decision had already been cited around 470 times.  Its effect is not going to be limited to antitrust cases.  Essentially, where the previous standard was that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief", under Twombly a complaint must present enough facts to state a claim that is plausible on its face. 

Defense counsel are going to have to rethink the cost benefit analysis of when it makes sense to file Rule 12(b)(6) motions.  There is more of a chance of success now in light of Twombly.   In particular, fraud claims and conspiracy claims that are pled without sufficient supporting facts should be candidates for a Twombly motion.  Also claims for punitive damages that are not supported by plausible factual allegations should be attacked at the outset of the litigation with a Twombly motion. 

Surprisingly, the first decision from the D.C. Court of Appeals to cite Twombly did so in the context of a motion to strike affirmative defenses and counterclaims under Rule 12(f).  See Franco v. National Capital Revitalization Corp., No. 06-CV-645 (July 12, 2007). As that opinion suggests, Twombly may also require changes in the way that affirmative defenses, counterclaims, and cross-claims are pled.

Checklist for E-Filings in DC Superior Court

Tips recently provided from the DC Superior Court for successful e-filing:

ü     I have the proper full case number and judge having checked at www.dccourts.gov/pa

ü     If I am filing in response to opposing counsel’s filing, I have checked my eService Inbox to make sure the court clerk accepted the opposing counsel’s filing before I eFile

ü     I have typed “/s/” and the filing attorney’s name, applied an imaged signature, or printed the document, had it signed and scanned

ü     I have named my documents appropriately on my computer (i.e. Motion for Summary Judgment, Certificate of Service, Answer, Opposition, Witness List)

ü     I have included a properly completed Certificate of Service with a signature and date of service specifying who and how service was accomplished

ü     I have included a Proposed Order in the efiling

ü     For filings over 25 pages, I am uploading all documents attached to the lead filing in the second field and checking the merger box

ü     For filings over 25 pages, I have also mailed a paper copy to the Judge

ü     I have emailed the Proposed Order to the judge to the judge’s eservice box:

ü     In a Microsoft Word or WordPerfect format

ü     Subject line includes case number followed by case name

ü     email format: judge[lastname]eserve@dcsc.gov or magistratejudge[lastname]eserve@dcsc.gov

ü     I have caused service of this filing to be made

Liability of DC Halfway House For Acts of Former Resident

In Smith v. Hope Village, Inc., No. 05-633 (RBW)(D.D.C. Apr. 12, 2007), the district court denied the defendant's motion for summary judgment, in which the defendant had argued in part that, as a matter of law, a halfway house owes no duty to unknown parties with whom it has no relationship for harm caused by an offender previously housed at the halfway house approximately five months prior to the offender's harmful act. 

An inmate named Kelly had been released from prison into the custody of the Hope Village halfway house in December, 2001.  (Although the opinion doesn't say, the pleadings indicate that the date was Dec. 12, 2001).  On March 7, 2002, less than three months later, Kelly was discharged from Hope Village and was placed under the supervision of the DC Court Services and Offender Supervision Agency.  About five months after that, on August 6, 2002, Kelly allegedly broke into a house in Silver Spring where he shot and killed two people -- one of whom was the plaintiff's nine year old daughter.

Kelly had a long rap sheet with numerous felonies, including one involving a loaded gun.

Plaintiff brought a wrongful death and survival action against Hope Village.  The theory of liability was that Hope Village was negligent in its supervision of Kelly, and as a result, the halfway house was responsible for his improper and untimely release into the community.  Plaintiff alleged that Hope Village knew, or should have known, of Kelly's violations of the terms of his conditional release while at Hope Village, yet it never disciplined him.

In its motion for summary judgment, Hope Village argued, among other things, that it does not owe any legally cognizable duty to the plaintiff, or to any parties with whom it has no pre-existing relationship, for injuries resulting from Kelly's criminal conduct five months after he was discharged from the halfway house program.  It also argued that there was no proximate cause due to a lack of foreseeability, and due to remoteness and superseding and intervening negligence.

In a lengthy opinion, Judge Walton rejected all of Hope Village's arguments, finding that Hope Village did owe a duty to people in the local community such as the plaintiff and her daughter, and that the question of foreseeability was for the jury.  Judge Walton also reinstated plaintiff's wrongful death claim, finding that the 3 year statute of limitations under the Maryland Wrongful Death Act applied, not the shorter period of limitations under the D.C. Act.

DC Bar's Virtual Law Library - Law of Lawyering

The DC Bar's website is sporting a "Virtual Library" these days.  Most significantly, it includes a lengthy treatise on the Law of Lawyering, courtesy of the law firm of Covington & Burling, described as follows:

This publication, written by D.C. Bar member David B. Isbell, is a comprehensive analysis of the D.C. Rules of Professional Conduct, which governs the ethical practice of law in the District of Columbia, as well as the attorney discipline system upholding those rules. Published 2004. Updated in part, March 2007, following amendments to the Model Rules in 2002 and 2003 and the D.C. Rules of Professional Conduct effective February 1, 2007.

This reference should be among those consulted by any D.C. lawyer researching an ethical issue.

The 30 day period for judicial review of a MD WCC award is not extended by three days for mailing

In Chance v. WMATA, No. 240 (In the Court of Special Appeals of Maryland, April 4, 2007), the Court held that the 30 day period to file a petition for judicial review under LE Section 9-737 starts running from the date of the mailing of the Commission's order, and that the 30 day period is NOT extended by Md. Rule 1-203(c)(which provides for a three-day extension to a presribed period within which a party has a right to act when the period commences after service upon the party).

Further, the opinion states that the 30 day period is in the nature of a statute of limitations and thus subject to waiver by failure of a party to raise it in the proper manner. Id., at n. 6.

In short, in a Md WCC matter, the losing party gets 30 days to file the petition for judicial review, and no extra 3 days for mailing. And if the other side makes that mistake and you don't raise it properly, the defense is waived.