Unlock the secrets of managing privilege and document preservation with Kelly Twigger on the Case of the Week podcast. What happens when giants like Lubrizol and IBM clash over contract breaches and the nuances of electronic information law? This episode promises to equip you with critical insights into Rule 502(d) and the timing of preservation duties—a must-know for any litigator in the digital age. Judge Jennifer Dow Armstrong's expert navigation through the competing motions between these corporate titans provides a rich tapestry of lessons on strategic litigation.
In a groundbreaking discussion, we unravel IBM's document preservation practices and their consequential waiver of privilege in spoliation claims. Discover why the timing of preservation duties is pivotal and how a well-crafted privilege log can tip the scales in litigation anticipation. This episode serves as a cautionary tale, highlighting the importance of timely data preservation in an era of rapid technological change. Whether you're a seasoned attorney or just starting out, this episode offers indispensable strategies for staying ahead in the legal realm.
Lubrizol Corp. v. IBM Corp
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Thank you for tuning in to Case of the Week with Kelly Twigger. If you found today’s discussion helpful, don’t forget to subscribe, rate, and leave a review wherever you get your podcasts. For more insights and resources on ediscovery, visit Minerva26 and explore our practical tools, case law library, and on-demand education from the Academy. Join us next episode as we break down another important case shaping the future of ediscovery.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Kelly Twigger (00:13):
Welcome to the Case of the Week podcast, where
each week, we break down arecent decision in electronic
discovery case law and talkabout the practical impact for
you and your clients and keepyou up to date on your
obligations with electronicallystored information as evidence.
If you're a litigator, legalprofessional or you love the
power of ESI as much as I do,this is the place to be.
(00:34):
I'm Kelly Twigger, the CEO andfounder of eDiscovery Assistant
and the principal at ESIAttorneys, with more than 25
years of experience navigatingthe evolving landscape of
litigation and eDiscovery.
I'm a practicing attorney,author, speaker, entrepreneur
and now podcaster who works as adiscovery strategist and expert
for clients at ESI Attorneysand to provide that knowledge to
(00:55):
all legal professionals throughour e-discovery assistant
platform.
In each episode, we'll tackle anew decision in e-discovery
case law and how it shapes bothyour litigation strategy and
planning for risk mitigation.
If you're ready for blunt,actionable insights that keep
you ahead of the curve, andmaybe a few laughs along the way
, this is your go-to podcast.
Subscribe or follow now tostart embracing the episode of
(01:32):
our Case of the Week seriesbrought to you by eDiscovery
Assistant.
This week's decision is a bigone, which raises the issues of
the scope of 502d, as well asthe importance of knowing when
the duty to preserve arises andthe potential implications for
waiver of privilege when thatargument is made incorrectly.
(01:52):
All right, let's dive into thisweek's decision, which comes to
us from the Lubrizol versus IBMbreach of contract action.
We covered the initialsanctions motion from this case
back on episode 108 of Case ofthe Week.
This week's decision, as Imentioned, comes to us from
Judge Jennifer Dow Armstrong.
She's a United Statesmagistrate judge in the Northern
(02:15):
District, ohio, and thisdecision is dated February 8,
2024.
Judge Armstrong has four totaldecisions in our eDiscovery
Assistant database and, asalways, we add the issue tags
for each of the decisions in ourdatabase.
And this week's issues includeattorney-client privilege waiver
, legal hold, spoliation,proportionality, failure to
(02:37):
produce and failure to preserve.
All right, what are the factswe're talking about here?
The underlying facts of thiscase include a breach of
contract between the partiesrelated to the construction of
an enterprise resource planningpiece of software.
Lubrizol alleges that IBMcommitted fraud and various
torts in connection with theproject to implement a new ERP
(02:58):
software, and Lubrizolsubsequently amended its
complaint to allege spoliationwhen it learned that IBM had
deleted the electronicallystored information of several
IBM personnel who worked on theERP project, which included both
current and former employees ofIBM.
Now, that's key because theemail boxes of departed
employees that were relevantwere deleted after Lubrizol
(03:21):
alleged IBM duty to preservearose.
There are a number of facts inthis case that go to the
timeline on the motions and thatemphasize, as we do regularly
here on Case of the Week, thatthe timeline in a case is
crucial.
The short story is that IBMargues its duty to preserve did
not arise until the filing ofthe complaint in April 2021, and
(03:44):
it implemented legal holds andpreservation in May 2021.
Lubrizol alleges that the dutyto preserve for IBM arose much
earlier.
Given multiple facts, includingthat Lubrizol sent to IBM a
notice terminating the party'scontract for cause in April 2020
, a full year before thecomplaint was filed.
The parties exchanged lettersaddressed to senior legal
(04:06):
personnel at both companies,labeled quote subject to Rule
408 and the Ohio and FederalRules of Evidence close quote,
in which Lubrizol described itslegal claims and damages in
correspondence to IBM and wasquote explicit about its plan to
sue IBM.
Ibm informed Lou Brasol that ithad hired outside counsel in
(04:27):
September of 2020, and theparties conducted a mediation in
November 2020, during whichthey acknowledged that there was
quote a massive gulf closequote between their respective
positions on claims, defensesand damages.
Now, despite all of those factsoccurring prior to the filing
of the complaint, ibm maintainsits position that its duty to
(04:49):
preserve did not arise untilafter the filing of the
complaint in April 2021.
Now we are before the court hereon two competing motions.
Lubrizol has made a motion tocompel the production of
documents and a motion from IBMasking the court to enter an FRE
502D order allowing it toproduce documents without
(05:09):
waiving privilege.
The basis of both motions isthe timing of when IBM's duty to
preserve arose.
Now the court really undertakesan analysis of each individual
step here, which is different.
Sometimes we get the courtsaying, hey, you've argued this,
this and this, but really thisissue is dispositive so I'm not
going to address the other ones.
That's not the case here.
(05:31):
The court goes through each ofthe individual motions and
there's interesting content foreach and interesting
implications, so we're going tocover those.
Let's start with IBM's motionfor an FRE 502D order.
The court cites the language ofFRE 501 and notes that Rule 502
was enacted to achieve two maingoals.
First, resolving disagreementamong the courts regarding the
(05:53):
effect of certain disclosures ofprivileged information.
And second, preventinglitigation costs from spiraling
due to fears that any disclosureof a privileged document would
result in subject matter waiverof all other communications on
the same topic.
Now IBM's motion asks the courtto authorize IBM to produce,
without waiving theattorney-client privilege or the
(06:14):
attorney work productprotection, all documents and
communications concerning quotethe preparation, implementation,
institution, application anddissemination by IBM of document
preservation and litigationholds close quote through May 15
, 2021.
And second, responses toLubrizal's interrogatories on
(06:35):
the same subject.
And third, a Rule 30b-6 witnesson the same subject.
Lubrizal argues that such anorder would permit IBM to
intentionally, rather thaninadvertently, disclose
privileged information withoutconstituting a subject matter
waiver of all other documentsand communications on the same
topic, and that the court lacksthe authority to do so.
(06:57):
Now the court notes initiallythat a court may enter into a
Rule 502d order on its owninitiative and without the
consent of both parties.
We covered that same issue onEpisode 127 of the Case of the
Week in the decision US versusCaptive Alternatives LLC and, as
I mentioned, deja will drop thelink to that decision as part
of the post on whatever platformyou're viewing us on.
(07:19):
But the court acknowledges herethat whether it has the
authority to enter a 502d orderthat covers intentional rather
than inadvertent disclosures ofprivileged information is
unclear.
The court then goes into someanalysis on different case law
as well as the Sedona conference, and the court notes that the
position of the Sedonaconference is that a court can
do so.
But then the court also citesthe several other decisions from
(07:43):
other courts that have heldthat it does not have that
authority.
And following a review of caselaw the court also cites the
several other decisions fromother courts that have held that
it does not have that authority.
And following a review of caselaw the court determines that it
remained unconvinced that ithad the authority to enter a
Rule 502D order thatpreemptively authorizes IBM to
make intentional disclosureswithout waiving the privilege,
even assuming that it did havethe authority.
(08:03):
The court concluded here thatthe Rule 502d order that IBM
proposes is not appropriate inscope and is not likely to
narrow and refine the party'sarguments for two reasons.
First, the time frame IBMselected did not cover all
relevant discussions and IBM'sproposed order would allow it to
(08:23):
disclose documents that supportits spoliation provision but
allow it to withhold lessfavorable documents.
As to the latter point, thecourt also noted several cases
that have identified that issueand refused to grant 502D orders
.
On this issue, the court heldthat IBM's proposed scope of a
502D order did not eliminate therisk of selective disclosure
(08:45):
and that it is not likely tonarrow the disputes between the
parties.
The court also found thatnothing in the text of 502D gave
the court the authority tounilaterally impose a broader
waiver of privilege than IBM hadagreed to.
With that, the court deniedIBM's motion.
Now the court then moved toLubrizol's motion to compel,
(09:06):
which involved an interrogatoryand multiple requests for
production.
The motion involves aninterrogatory that Lubrizol sent
to IBM and I want you to listencarefully to the language of
the interrogatory.
The interrogatory asked IBM toidentify quote all
communications before 2022concerning IBM preparing,
(09:27):
implementing, instituting,applying and disseminating
document preservation andlitigation holds in connection
with quote the ERP project.
The instructions to theinterrogatory state that
identify means to provide thedate of the communication,
whether the communication wasoral or written, and the
individuals who participated inthe communication.
Now Lubrizol acknowledges theprivilege in those documents,
(09:50):
but wants a log of the actionstaken to identify whether IBM
put a hold in place when itsduty to preserve arose.
Now the court notes that quoteunder both federal and Ohio law,
the mere fact that a partycommunicated with counsel is not
privileged.
Quote, quote.
The court also notes that theinterrogatory does not impose an
(10:10):
undue burden on IBM and thatthe existence, timing and
frequency of the communicationsis relevant to Lubrizol's
argument that IBM anticipatedlitigation at the time of the
alleged spoliation, ie beforethe complaint was filed in April
2021.
The court also found that IBMfailed to meet its burden on
proportionality.
(10:30):
Finding that quote beyond thebare assertion that responding
to interrogatory number sixwould require it to list
numerous communications, ibm hasnot provided any specific
evidence regarding the volume ofcommunications at issue or the
burden that responding to theinterrogatory would impose.
Close quote Now.
We've discussed that multipletimes on Case of the Week You've
(10:53):
got to provide specific factsto prevail on a proportionality
argument.
Finding that the documents wererelevant to Lubrizal's
foliation claim, the court alsorequired IBM to produce
documents and communicationsregarding one any written legal
hold notices.
Two any steps IBM took topreserve relevant evidence.
(11:14):
Three the potential forlitigation.
Four the parties failedNovember 18, 2020 mediation to
the extent those documentsrelate to the potential for
litigation.
Five IBM's policies, practicesand procedures for preserving or
deleting the data of the formeremployees at issue, six steps
(11:34):
IBM took to determine whether itwas possible to restore or
retrieve the information deletedfrom the email boxes of the
former IBM employees.
Seven communications from IBMand the former IBM employees
regarding data preservation anddeletion, eight communications
from a former employee regardingdata-related passwords.
(11:55):
And nine documents andcommunications regarding the
separation of the former IBMemployees from IBM and the
preservation of their files.
The court also found that IBMhad produced extensive
non-privileged materials onthese topics and that IBM had
challenged Lubrizol's claim ofrelevance and ordered IBM to
(12:15):
produce any additionalnon-privileged documents.
So at this point we've got thelog has to be produced and
non-privileged documents have tobe produced.
Regarding when the duty topreserve arose, the next
question is whether or not IBMwaived its privilege with regard
to the other privilegematerials that would apply
(12:37):
related to the duty to preserve,and the court here applied a
three-factor test under Ohio lawand found that IBM did waive
its privilege with respect toIBM's document preservation
efforts.
Whether IBM recentlyanticipated litigation at the
time of the alleged spoliationand when IBM identified the
(12:57):
disputed custodians asindividuals who might possess
information relevant to the case.
That's a pretty importantholding here.
Now, under that test, which isdictated by the Hearn case, the
court found that IBM assertedthe privilege through an
affirmative act when it sent aletter on October 29, 2021, in
which it alleged that it did notreasonably anticipate
(13:20):
litigation at the time thedocuments were deleted and that
it did not identify departedemployees as custodians until
Lubrizol included them in theirESI disclosures.
Remember that the complaint wasfiled in April 2021, six months
prior to this letter statingIBM's idea of when its duty to
(13:40):
preserve arose.
Evaluating the Hearn test, thecourt found that, by arguing it
did not reasonably anticipatelitigation until the complaint
was filed, ibm made the advicethat it had received from
counsel regarding its documentpreservation efforts and whether
litigation was reasonablylikely prior to that day
(14:00):
relevant evidence.
According to the court quote ifcounsel was telling IBM before
April 2021 that litigation wasreasonably likely, that is
certainly relevant to Lubrizol'sclaim.
Similarly, if IBM's counselidentified the disputed
employees as potentiallyrelevant custodians before their
(14:20):
email boxes were deleted, thatwould impact IBM's state of mind
and the strength of Lubrizol'sspoliation claim.
Close quote the court alsofound that applying the
privilege here would denyLubrizol access to information
that is quote vital to itsspoliation claim.
Close quote as such, the courtgranted Lubrizol's motion to
compel and required IBM toproduce all non-privileged
(14:43):
documents responsive to theinterrogatory and RFPs at issue
all documents responsive tointerrogatory number 16 and the
relevant request for productionfor which IBM was currently
claiming privilege.
That addressed IBM's documentpreservation efforts, whether
IBM reasonably anticipatedlitigation prior to the alleged
spoliation or when IBMidentified the disputed
(15:06):
custodians as individualspossessing potentially relevant
information.
Now, this is a really importantruling because this essentially
says, by issuing a letter toLubrizol claiming that the duty
to preserve arose after thefiling of the complaint, ibm
waived all of its privilege incommunications that would have
(15:29):
shown that it's foliated data,because its duty to preserve
arose earlier than itcontemplated.
So what are our takeaways fromthis case?
Well, as I just mentioned,there's a lot to unpack in this
decision.
Let's start with the scope ofFederal Rule of Evidence 502d,
while there is still a questionhere, we are seeing more and
(15:50):
more courts come down, as JudgeArmstrong did here, and find
that Federal Rule of Evidence502d does not cover an
intentional production ofprivileged material, only one
that is inadvertent.
It's not a shield to prevent aparty having to review only one
that allows cover when youinadvertently produce privileged
material.
Now, interestingly, that seemsto beg the question material Now
(16:17):
interestingly, that seems tobeg the question how is 502d
different than rule 26?
That requires reasonableefforts.
Is it just another easier layerof protection, but not
all-encompassing?
And if that's the case, is therule really meeting the
underlying rationale for 502d,which was meant to curb costs?
In review, we'll have to keepan eye on how that continues to
develop.
I do agree that allowing aparty to engage in a document
dump and then use 502d to claima privilege isn't right.
(16:40):
So we'll have to just keep oureyes open as to how things
happen here.
But keep in mind that the scopeof 502d is for inadvertent
production under most courts'rulings at this time rejecting
the Sedona Conference'sstatement that intentional
disclosure should also becovered.
Now the next issue here onLubrizol's motion to compel
(17:01):
identifies an excellentstrategic angle to take when you
suspect or allege spoliationbased on the date of the duty to
preserve.
Lubrizol has the court orderingIBM to first produce a
privilege log of the documentsregarding its discussions about
when the duty to preserve aroseand what actions were taken
internally to identifycustodians and preserve data.
(17:22):
Just a log, but stillmonumental in the log's
application to Lubrizol'sability to show that IBM
anticipated litigation longbefore it claimed it did at the
filing of the complaint.
This is a great strategy to use, especially one where you don't
get the court to find waiverthe way that the court did here.
There can be no sanctions forfailure to preserve where the
(17:45):
duty to preserve has notattached.
So getting a log maydemonstrate when a party
believed that a duty arose is ahuge step and just a terrific
strategic plan to be able to use.
So file that one away.
But as we know, the court goeseven further than the log here,
and the huge element in the roomof this decision lies in the
court's ruling that, byasserting that it did not
(18:07):
anticipate litigation until thefiling of the complaint, ibm
waived privilege in documentsbetween counsel that it may have
thought otherwise wereprivileged.
Now that's a big waiver, folks,and it's a wake-up call.
If you aren't already doingthis.
You need to have a clearunderstanding of when the duty
to preserve arises and how youcan support your argument.
(18:28):
The facts here in this casethat we went over are pretty
suggestive that IBM should haveknown the duty to preserve arose
much earlier, and theyabsolutely suggest that the duty
to preserve arose long beforethe filing of the complaint.
Now, this decision is key in anumber of respects, but it all
(18:49):
comes down to the fact that youneed to advise your clients
carefully on when the duty topreserve arises and what
obligations that duty imposes onyour need to identify, preserve
and collect data to preventspoliation.
This is a hard concept and itgets harder the more technology
gets complicated.
As we talk about Slack andMicrosoft Teams, data and
(19:11):
hyperlinked files and all ofthose issues that have to be
dealt with.
You've got to have a plan inplace now more than ever to be
able to identify when the dutyto preserve has arisen and what
you're going to do to identifyand preserve information quickly
.
Okay, we'll keep an eye on this.
Loopers all matter goingforward, as there's very likely
(19:32):
to be additional sanctionsmotions if the case progresses.
That's our case of the week forthis week.
Thanks so much for joining me.
We'll be back again next weekwith another decision from our
eDiscovery Assistant database.
As always, if you havesuggestions for a case to be
covered, please drop me a line.
If you'd like to receive ournewsletter and have the Case of
the Week delivered directly toyour inbox.
You can sign up atediscoveryassistantcom If you're
(19:55):
interested in doing a freetrial of our case law and
resource database.
You can also jump toediscoveryassistantcom to get
started.
Resource database you can alsojump to ediscoveryassistantcom
to get started.
Thanks for joining me on theCase of the Week podcast Tune in
next episode as I discuss a newdecision in e-discovery case
law and identify the issues youneed to be paying attention to
and how they can help you dobetter discovery for your
clients and leverage the powerof ESI.
(20:18):
Be sure to subscribe and leavea review to help others discover
the show and be kept in theknow on all things electronic
discovery.
I'm Kelly Twigger.
See you next time.
Welcome to the Case of the Week podcast, where
each week, we break down arecent decision in electronic
discovery case law and talkabout the practical impact for
you and your clients and keepyou up to date on your
obligations with electronicallystored information as evidence.
If you're a litigator, legalprofessional or you love the
power of ESI as much as I do,this is the place to be.
(00:34):
I'm Kelly Twigger, the CEO andfounder of eDiscovery Assistant
and the principal at ESIAttorneys, with more than 25
years of experience navigatingthe evolving landscape of
litigation and eDiscovery.
I'm a practicing attorney,author, speaker, entrepreneur
and now podcaster who works as adiscovery strategist and expert
for clients at ESI Attorneysand to provide that knowledge to
(00:55):
all legal professionals throughour e-discovery assistant
platform.
In each episode, we'll tackle anew decision in e-discovery
case law and how it shapes bothyour litigation strategy and
planning for risk mitigation.
If you're ready for blunt,actionable insights that keep
you ahead of the curve, andmaybe a few laughs along the way
, this is your go-to podcast.
Subscribe or follow now tostart embracing the episode of
(01:32):
our Case of the Week seriesbrought to you by eDiscovery
Assistant.
This week's decision is a bigone, which raises the issues of
the scope of 502d, as well asthe importance of knowing when
the duty to preserve arises andthe potential implications for
waiver of privilege when thatargument is made incorrectly.
(01:52):
All right, let's dive into thisweek's decision, which comes to
us from the Lubrizol versus IBMbreach of contract action.
We covered the initialsanctions motion from this case
back on episode 108 of Case ofthe Week.
This week's decision, as Imentioned, comes to us from
Judge Jennifer Dow Armstrong.
She's a United Statesmagistrate judge in the Northern
(02:15):
District, ohio, and thisdecision is dated February 8,
2024.
Judge Armstrong has four totaldecisions in our eDiscovery
Assistant database and, asalways, we add the issue tags
for each of the decisions in ourdatabase.
And this week's issues includeattorney-client privilege waiver
, legal hold, spoliation,proportionality, failure to
(02:37):
produce and failure to preserve.
All right, what are the factswe're talking about here?
The underlying facts of thiscase include a breach of
contract between the partiesrelated to the construction of
an enterprise resource planningpiece of software.
Lubrizol alleges that IBMcommitted fraud and various
torts in connection with theproject to implement a new ERP
(02:58):
software, and Lubrizolsubsequently amended its
complaint to allege spoliationwhen it learned that IBM had
deleted the electronicallystored information of several
IBM personnel who worked on theERP project, which included both
current and former employees ofIBM.
Now, that's key because theemail boxes of departed
employees that were relevantwere deleted after Lubrizol
(03:21):
alleged IBM duty to preservearose.
There are a number of facts inthis case that go to the
timeline on the motions and thatemphasize, as we do regularly
here on Case of the Week, thatthe timeline in a case is
crucial.
The short story is that IBMargues its duty to preserve did
not arise until the filing ofthe complaint in April 2021, and
(03:44):
it implemented legal holds andpreservation in May 2021.
Lubrizol alleges that the dutyto preserve for IBM arose much
earlier.
Given multiple facts, includingthat Lubrizol sent to IBM a
notice terminating the party'scontract for cause in April 2020
, a full year before thecomplaint was filed.
The parties exchanged lettersaddressed to senior legal
(04:06):
personnel at both companies,labeled quote subject to Rule
408 and the Ohio and FederalRules of Evidence close quote,
in which Lubrizol described itslegal claims and damages in
correspondence to IBM and wasquote explicit about its plan to
sue IBM.
Ibm informed Lou Brasol that ithad hired outside counsel in
(04:27):
September of 2020, and theparties conducted a mediation in
November 2020, during whichthey acknowledged that there was
quote a massive gulf closequote between their respective
positions on claims, defensesand damages.
Now, despite all of those factsoccurring prior to the filing
of the complaint, ibm maintainsits position that its duty to
(04:49):
preserve did not arise untilafter the filing of the
complaint in April 2021.
Now we are before the court hereon two competing motions.
Lubrizol has made a motion tocompel the production of
documents and a motion from IBMasking the court to enter an FRE
502D order allowing it toproduce documents without
(05:09):
waiving privilege.
The basis of both motions isthe timing of when IBM's duty to
preserve arose.
Now the court really undertakesan analysis of each individual
step here, which is different.
Sometimes we get the courtsaying, hey, you've argued this,
this and this, but really thisissue is dispositive so I'm not
going to address the other ones.
That's not the case here.
(05:31):
The court goes through each ofthe individual motions and
there's interesting content foreach and interesting
implications, so we're going tocover those.
Let's start with IBM's motionfor an FRE 502D order.
The court cites the language ofFRE 501 and notes that Rule 502
was enacted to achieve two maingoals.
First, resolving disagreementamong the courts regarding the
(05:53):
effect of certain disclosures ofprivileged information.
And second, preventinglitigation costs from spiraling
due to fears that any disclosureof a privileged document would
result in subject matter waiverof all other communications on
the same topic.
Now IBM's motion asks the courtto authorize IBM to produce,
without waiving theattorney-client privilege or the
(06:14):
attorney work productprotection, all documents and
communications concerning quotethe preparation, implementation,
institution, application anddissemination by IBM of document
preservation and litigationholds close quote through May 15
, 2021.
And second, responses toLubrizal's interrogatories on
(06:35):
the same subject.
And third, a Rule 30b-6 witnesson the same subject.
Lubrizal argues that such anorder would permit IBM to
intentionally, rather thaninadvertently, disclose
privileged information withoutconstituting a subject matter
waiver of all other documentsand communications on the same
topic, and that the court lacksthe authority to do so.
(06:57):
Now the court notes initiallythat a court may enter into a
Rule 502d order on its owninitiative and without the
consent of both parties.
We covered that same issue onEpisode 127 of the Case of the
Week in the decision US versusCaptive Alternatives LLC and, as
I mentioned, deja will drop thelink to that decision as part
of the post on whatever platformyou're viewing us on.
(07:19):
But the court acknowledges herethat whether it has the
authority to enter a 502d orderthat covers intentional rather
than inadvertent disclosures ofprivileged information is
unclear.
The court then goes into someanalysis on different case law
as well as the Sedona conference, and the court notes that the
position of the Sedonaconference is that a court can
do so.
But then the court also citesthe several other decisions from
(07:43):
other courts that have heldthat it does not have that
authority.
And following a review of caselaw the court also cites the
several other decisions fromother courts that have held that
it does not have that authority.
And following a review of caselaw the court determines that it
remained unconvinced that ithad the authority to enter a
Rule 502D order thatpreemptively authorizes IBM to
make intentional disclosureswithout waiving the privilege,
even assuming that it did havethe authority.
(08:03):
The court concluded here thatthe Rule 502d order that IBM
proposes is not appropriate inscope and is not likely to
narrow and refine the party'sarguments for two reasons.
First, the time frame IBMselected did not cover all
relevant discussions and IBM'sproposed order would allow it to
(08:23):
disclose documents that supportits spoliation provision but
allow it to withhold lessfavorable documents.
As to the latter point, thecourt also noted several cases
that have identified that issueand refused to grant 502D orders
.
On this issue, the court heldthat IBM's proposed scope of a
502D order did not eliminate therisk of selective disclosure
(08:45):
and that it is not likely tonarrow the disputes between the
parties.
The court also found thatnothing in the text of 502D gave
the court the authority tounilaterally impose a broader
waiver of privilege than IBM hadagreed to.
With that, the court deniedIBM's motion.
Now the court then moved toLubrizol's motion to compel,
(09:06):
which involved an interrogatoryand multiple requests for
production.
The motion involves aninterrogatory that Lubrizol sent
to IBM and I want you to listencarefully to the language of
the interrogatory.
The interrogatory asked IBM toidentify quote all
communications before 2022concerning IBM preparing,
(09:27):
implementing, instituting,applying and disseminating
document preservation andlitigation holds in connection
with quote the ERP project.
The instructions to theinterrogatory state that
identify means to provide thedate of the communication,
whether the communication wasoral or written, and the
individuals who participated inthe communication.
Now Lubrizol acknowledges theprivilege in those documents,
(09:50):
but wants a log of the actionstaken to identify whether IBM
put a hold in place when itsduty to preserve arose.
Now the court notes that quoteunder both federal and Ohio law,
the mere fact that a partycommunicated with counsel is not
privileged.
Quote, quote.
The court also notes that theinterrogatory does not impose an
(10:10):
undue burden on IBM and thatthe existence, timing and
frequency of the communicationsis relevant to Lubrizol's
argument that IBM anticipatedlitigation at the time of the
alleged spoliation, ie beforethe complaint was filed in April
2021.
The court also found that IBMfailed to meet its burden on
proportionality.
(10:30):
Finding that quote beyond thebare assertion that responding
to interrogatory number sixwould require it to list
numerous communications, ibm hasnot provided any specific
evidence regarding the volume ofcommunications at issue or the
burden that responding to theinterrogatory would impose.
Close quote Now.
We've discussed that multipletimes on Case of the Week You've
(10:53):
got to provide specific factsto prevail on a proportionality
argument.
Finding that the documents wererelevant to Lubrizal's
foliation claim, the court alsorequired IBM to produce
documents and communicationsregarding one any written legal
hold notices.
Two any steps IBM took topreserve relevant evidence.
(11:14):
Three the potential forlitigation.
Four the parties failedNovember 18, 2020 mediation to
the extent those documentsrelate to the potential for
litigation.
Five IBM's policies, practicesand procedures for preserving or
deleting the data of the formeremployees at issue, six steps
(11:34):
IBM took to determine whether itwas possible to restore or
retrieve the information deletedfrom the email boxes of the
former IBM employees.
Seven communications from IBMand the former IBM employees
regarding data preservation anddeletion, eight communications
from a former employee regardingdata-related passwords.
(11:55):
And nine documents andcommunications regarding the
separation of the former IBMemployees from IBM and the
preservation of their files.
The court also found that IBMhad produced extensive
non-privileged materials onthese topics and that IBM had
challenged Lubrizol's claim ofrelevance and ordered IBM to
(12:15):
produce any additionalnon-privileged documents.
So at this point we've got thelog has to be produced and
non-privileged documents have tobe produced.
Regarding when the duty topreserve arose, the next
question is whether or not IBMwaived its privilege with regard
to the other privilegematerials that would apply
(12:37):
related to the duty to preserve,and the court here applied a
three-factor test under Ohio lawand found that IBM did waive
its privilege with respect toIBM's document preservation
efforts.
Whether IBM recentlyanticipated litigation at the
time of the alleged spoliationand when IBM identified the
(12:57):
disputed custodians asindividuals who might possess
information relevant to the case.
That's a pretty importantholding here.
Now, under that test, which isdictated by the Hearn case, the
court found that IBM assertedthe privilege through an
affirmative act when it sent aletter on October 29, 2021, in
which it alleged that it did notreasonably anticipate
(13:20):
litigation at the time thedocuments were deleted and that
it did not identify departedemployees as custodians until
Lubrizol included them in theirESI disclosures.
Remember that the complaint wasfiled in April 2021, six months
prior to this letter statingIBM's idea of when its duty to
(13:40):
preserve arose.
Evaluating the Hearn test, thecourt found that, by arguing it
did not reasonably anticipatelitigation until the complaint
was filed, ibm made the advicethat it had received from
counsel regarding its documentpreservation efforts and whether
litigation was reasonablylikely prior to that day
(14:00):
relevant evidence.
According to the court quote ifcounsel was telling IBM before
April 2021 that litigation wasreasonably likely, that is
certainly relevant to Lubrizol'sclaim.
Similarly, if IBM's counselidentified the disputed
employees as potentiallyrelevant custodians before their
(14:20):
email boxes were deleted, thatwould impact IBM's state of mind
and the strength of Lubrizol'sspoliation claim.
Close quote the court alsofound that applying the
privilege here would denyLubrizol access to information
that is quote vital to itsspoliation claim.
Close quote as such, the courtgranted Lubrizol's motion to
compel and required IBM toproduce all non-privileged
(14:43):
documents responsive to theinterrogatory and RFPs at issue
all documents responsive tointerrogatory number 16 and the
relevant request for productionfor which IBM was currently
claiming privilege.
That addressed IBM's documentpreservation efforts, whether
IBM reasonably anticipatedlitigation prior to the alleged
spoliation or when IBMidentified the disputed
(15:06):
custodians as individualspossessing potentially relevant
information.
Now, this is a really importantruling because this essentially
says, by issuing a letter toLubrizol claiming that the duty
to preserve arose after thefiling of the complaint, ibm
waived all of its privilege incommunications that would have
(15:29):
shown that it's foliated data,because its duty to preserve
arose earlier than itcontemplated.
So what are our takeaways fromthis case?
Well, as I just mentioned,there's a lot to unpack in this
decision.
Let's start with the scope ofFederal Rule of Evidence 502d,
while there is still a questionhere, we are seeing more and
(15:50):
more courts come down, as JudgeArmstrong did here, and find
that Federal Rule of Evidence502d does not cover an
intentional production ofprivileged material, only one
that is inadvertent.
It's not a shield to prevent aparty having to review only one
that allows cover when youinadvertently produce privileged
material.
Now, interestingly, that seemsto beg the question material Now
(16:17):
interestingly, that seems tobeg the question how is 502d
different than rule 26?
That requires reasonableefforts.
Is it just another easier layerof protection, but not
all-encompassing?
And if that's the case, is therule really meeting the
underlying rationale for 502d,which was meant to curb costs?
In review, we'll have to keepan eye on how that continues to
develop.
I do agree that allowing aparty to engage in a document
dump and then use 502d to claima privilege isn't right.
(16:40):
So we'll have to just keep oureyes open as to how things
happen here.
But keep in mind that the scopeof 502d is for inadvertent
production under most courts'rulings at this time rejecting
the Sedona Conference'sstatement that intentional
disclosure should also becovered.
Now the next issue here onLubrizol's motion to compel
(17:01):
identifies an excellentstrategic angle to take when you
suspect or allege spoliationbased on the date of the duty to
preserve.
Lubrizol has the court orderingIBM to first produce a
privilege log of the documentsregarding its discussions about
when the duty to preserve aroseand what actions were taken
internally to identifycustodians and preserve data.
(17:22):
Just a log, but stillmonumental in the log's
application to Lubrizol'sability to show that IBM
anticipated litigation longbefore it claimed it did at the
filing of the complaint.
This is a great strategy to use, especially one where you don't
get the court to find waiverthe way that the court did here.
There can be no sanctions forfailure to preserve where the
(17:45):
duty to preserve has notattached.
So getting a log maydemonstrate when a party
believed that a duty arose is ahuge step and just a terrific
strategic plan to be able to use.
So file that one away.
But as we know, the court goeseven further than the log here,
and the huge element in the roomof this decision lies in the
court's ruling that, byasserting that it did not
(18:07):
anticipate litigation until thefiling of the complaint, ibm
waived privilege in documentsbetween counsel that it may have
thought otherwise wereprivileged.
Now that's a big waiver, folks,and it's a wake-up call.
If you aren't already doingthis.
You need to have a clearunderstanding of when the duty
to preserve arises and how youcan support your argument.
(18:28):
The facts here in this casethat we went over are pretty
suggestive that IBM should haveknown the duty to preserve arose
much earlier, and theyabsolutely suggest that the duty
to preserve arose long beforethe filing of the complaint.
Now, this decision is key in anumber of respects, but it all
(18:49):
comes down to the fact that youneed to advise your clients
carefully on when the duty topreserve arises and what
obligations that duty imposes onyour need to identify, preserve
and collect data to preventspoliation.
This is a hard concept and itgets harder the more technology
gets complicated.
As we talk about Slack andMicrosoft Teams, data and
(19:11):
hyperlinked files and all ofthose issues that have to be
dealt with.
You've got to have a plan inplace now more than ever to be
able to identify when the dutyto preserve has arisen and what
you're going to do to identifyand preserve information quickly
.
Okay, we'll keep an eye on this.
Loopers all matter goingforward, as there's very likely
(19:32):
to be additional sanctionsmotions if the case progresses.
That's our case of the week forthis week.
Thanks so much for joining me.
We'll be back again next weekwith another decision from our
eDiscovery Assistant database.
As always, if you havesuggestions for a case to be
covered, please drop me a line.
If you'd like to receive ournewsletter and have the Case of
the Week delivered directly toyour inbox.
You can sign up atediscoveryassistantcom If you're
(19:55):
interested in doing a freetrial of our case law and
resource database.
You can also jump toediscoveryassistantcom to get
started.
Resource database you can alsojump to ediscoveryassistantcom
to get started.
Thanks for joining me on theCase of the Week podcast Tune in
next episode as I discuss a newdecision in e-discovery case
law and identify the issues youneed to be paying attention to
and how they can help you dobetter discovery for your
clients and leverage the powerof ESI.
(20:18):
Be sure to subscribe and leavea review to help others discover
the show and be kept in theknow on all things electronic
discovery.
I'm Kelly Twigger.
See you next time.
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