Every week, the Array team reviews the latest news and analysis about the evolving field of eDiscovery to bring you the topics and trends you need to know. This week’s post covers the period of December 8-14. Here’s what’s happening.
Consider Proportionality Before Conflict of Laws, Says Sedona Conference Commentary on Cross-Border Discovery | New Jersey Court Awards $845K for Spoliation
The Sedona Conference in November released a final post-public-comment version of Commentary on Proportionality in Cross-Border Discovery. The commentary recommended that courts consider proportionality before addressing any conflict between U.S. law on discovery and non-U.S. laws that may limit discovery.
The burden versus benefit analysis of Federal Rule of Civil Procedure 26 – including a look at the potential burdens and benefits around complying with non-U.S. laws on data protection – may render the information sought not discoverable before a court even needs to consider the conflict of law, the Sedona Conference Working Group 6 on International Electronic Information Management, Discovery, and Disclosure wrote in the commentary.
“There is no reason for parties and the court to spend time fighting over or seeking to resolve hypothetical comity issues for discovery that may not even be within scope for a particular case, because such discovery does not even meet the definition of discoverable evidence,” the commentary stated.
The recommendation stated that a court should first consider whether the discovery is relevant and proportional under Rule 26(b) before turning to comity considerations. The proportionality consideration should include the burden on parties or non-parties to comply with non-U.S. laws, like the European Union’s General Data Protection Regulation or China’s Personal Information Protection Law, and the potential risk of not complying with such laws.
Even if the discovery sought passes the proportionality analysis, the commentary suggested that parties should next consider transfer where applicable under the Hague Convention, which outlines the procedures for requesting and transmitting data, including specifying which authorities are responsible in each country and how the data should be handled.
Only after the court has considered Rule 26 and the potential to obtain discovery through the Hague Convention should it turn to the comity analysis set forth in Société Nationale Industrielle Aerospatiale v. U.S. Dist. Court for the S. Dist. of Iowa, 482 U.S. 522 (1987).
The commentary concluded with practice points for parties in cases involving cross-border discovery disputes. The practice points were consistent with the recommendations regarding the order of consideration of proportionality and comity, and also recommended that parties be prepared to clearly specify the burdens and benefits with each other and to the court. One practice point also stated, “Parties should put in place, and courts should encourage, practices that promote compliance with data protection, labor, and confidentiality laws while also reducing the burden and expense of cross-border discovery ….”
New Jersey Court Awards $845K for Spoliation
The Essex County Superior Court in New Jersey recently awarded a medical practice and a revenue management company (RMC) damages of $845,000 against a doctor and an employee of the RMC for spoliation of evidence in a case alleging that the doctor and employee took proprietary information and intended to create a competing RMC.
According to the complaint in the matter, the doctor, Kushal Shukla, used the information to start a competing medical practice, in violation of his noncompete agreement with medical practice Salerno Medical Associates. His relative, defendant Rajiv Pandya, allegedly copied patient data, at Shukla’s instruction, from Pandya’s employer, plaintiff Axial Health Consultant.
The damages award, as reported by Law.com, included around $267,000 for services provided by plaintiffs’ computer forensics expert, approximately $575,000 for investigative costs incurred by plaintiffs’ law firm, and $2,289 for an investigative company. According to the Trial Judgment, the damages were awarded for spoliation, as well as the New Jersey Computer Related Offenses Act and New Jersey Trade Secrets Act. Other counts, including conversion, misappropriation of trade secrets, violations of New Jersey Racketeer Influenced and Corrupt Organizations Act, and more, were dismissed.
According to the court’s opinion, Shukla admitted to deleting emails and WhatsApp messages “throughout this litigation,” including after multiple court orders regarding preservation. “Plaintiffs proved by a preponderance of the evidence that Dr. Shukla was fully aware of his obligation to preserve evidence, and, despite that awareness, he spoliated evidence, including thousands of WhatsApp text messages, phone call records, Internet browser history records, emails and other documents from crucial time periods in the case and between key people,” the letter opinion noted.
In light of the spoliation, the court made an adverse inference against the defendants, taking as established the facts that defendants misappropriated plaintiffs’ proprietary information and stole trade secrets. However, the court found that plaintiffs fell short of establishing that the defendants actually established a competing RCM company.
On December 12, Shukla filed a motion for reconsideration, disputing the factual and legal bases of the spoliation finding. The brief claimed that Shukla deleted documents that were not relevant to the litigation and not subject to the court’s preservation orders, and that the documents sought were in plaintiffs’ possession.
On the same day, plaintiffs filed a motion for attorneys’ fees. Both motions are scheduled to be decided in January 2025.
Other recent eDiscovery news and headlines:
- ‘Entitlement to Information Has Its Limits:’ Judge Denies Another Discovery Deadline Extension in Trademark Suit (Law.com)
- UAW President Must Forfeit Documents to Watchdog, Judge Says (Bloomberg Law)
Julia Helmer; Director, Client Solutions
With 15 years of expertise, Julia excels at optimizing enterprise eDiscovery workflows from start to finish. With a deep understanding of how to seamlessly integrate workflows across various eDiscovery platforms, Julia creates tailored solutions for data identification, legal holds, ESI collections, and productions. By harnessing the power of Technology Assisted Review and Analytics, she delivers efficient, cost-effective results that align with best practices and budgetary constraints. Julia’s exceptional communication and customer service skills have fostered strong, lasting relationships with both clients and Project Management teams, enabling her to effectively problem-solve and drive success across numerous projects.
