ALLERGAN, INC., a Delaware corporation, Plaintiff, v. MERZ PHARMACEUTICALS, LLC, a North Carolina corporation, etc., et al., Defendants, And all related cross-actions Case No.: SACV11-00446 AG (Ex) United States District Court, C.D. California Signed June 09, 2011 Counsel Brett J. Williamson, O'Melveny and Myers LLP, Molly J. Magnuson, One LLP, Newport Beach, CA, Brian Neach, Pacheco and Neach PC, Irvine, CA, Daniel M. Petrocelli, O. Melveny and Myers LLP, Los Angeles, CA, Edward N. Moss, Pro Hac Vice, O'Melveny and Myers LLP, New York, NY, Jeffrey S. Bucholtz, Pro Hac Vice, Paul Alessio Mezzina, King and Spalding LLP, Washington, DC, for Plaintiff. Eric P. Enson, Richard Joseph Grabowski, Joseph Hany Tadros, Steven M. Zadravecz, Robert A. Naeve, Jones Day, Irvine, CA, Frederick L. McKnight, Jones Day, Los Angeles, CA, Sharyl Reisman, Pro Hac Vice, Jones Day, New York, NY, Mark Anthony Rodriguez, Michael L. Willoughby, Specter and Willoughby LLP, Newport Beach, CA, for Defendants Guilford, Andrew J., United States District Judge REPORT AND RECOMMENDATION OF SPECIAL MASTER RE PLAINTIFF’S MOTION TO COMPEL RE INDIVIDUAL DEFENDANTS’ ESI AND [PROPOSED] ORDER *1 TO THE COURT: IF NO OBJECTION, SIGN ON THURSDAY, JUNE 2, 2011 This matter was referred to the undersigned as Special Master pursuant to stipulation between the parties and the Court’s order thereon. For a considerable time the parties have been negotiating and attempting to cooperate with respect to the production of information stored in electronic media in the possession of the Individual Defendants. Ultimately, a fundamental disagreement solidified over the production of a “forensic image” of the various forms of media (desired by Plaintiff) as opposed to the production of various forms of data derived from the media in electronic format. As a result, Plaintiff served and lodged with the Special Master (then the State Court Discovery Referee) its motion to compel the production of the image itself. The matter has been fully briefed, argued and submitted to the Special Master for decision. Accordingly, it is now RECOMMENDED TO THE COURT as follows: TECHNICAL ISSUES 1. The interesting procedural context of this motion (and its companion Motion to Compel the Deposition of Erin Sullivan) finds the two motions straddling the border between State Court and the Federal Court due to removal of the action while both motions were aborning. Both motions were served prior to removal. The time for responding was stayed by removal. The parties then stipulated that the Discovery Referee in the State Court proceeding become the Special Master in the Federal proceeding and that the Special Master will “... hear and determine ... the two motions that are currently pending.” The stipulation goes on to set a briefing schedule for the Opposition and Reply in each case. 2. What the parties neglected to do is to deal with the applicable law that should apply to the motions - both having been initiated under State law and procedure. Considerable debate in both the papers and argument surrounded this question. Although they claim not to be, it appears to the Special Master that both sides are a bit confused as to the applicable law. 3. Rather than tackle this subject head-on, the Special Master will simply do as the clear intent of the parties suggests: “hear and determine the two motions” with that determination being based upon legal and procedural principles common to both systems of law, but leaning more heavily on Federal law concerning Electronically Stored Information [ESI]. DISCUSSION 4. While it is a challenge to summarize hundreds of pages of briefs, declarations, exhibits and cases submitted to the Special Master for review and analysis, the fundamental positions of the parties with respect to these issues appear to be as follows: INDIVIDUAL DEFENDANTS: The use of search terms is the right approach. Already thousands of pages of documents have been produced, derived from the native media, that focus the search on materials that are likely relevant to the case. To do otherwise imposes a huge burden on the Individual Defendants to sift through gigabytes of information that may be totally unrelated to any legitimate interest of the Plaintiff in order to safeguard against the disclosure of material that is sensitive and privileged. After all, these are private computers and storage media, not company equipment. Much progress has already been made by utilizing this methodology. Plaintiff’s complaint about the quality and quantity of metadata can be addressed by the experts managing the data. Tell us what you want and we will make a good-faith attempt to get it for you. *2 PLAINTIFFS: We went along with the “forensic imaging” and “search term” ideas proposed by the Individual Defendants in hopes that it would be productive and resolve our discovery concerns. It has not. Metadata is missing and incorrect. Search terms are a stabbing at criteria that produce uncertain results. We have a legitimate need to look at the imaged media to be able to investigate the potential trails of deleted or transferred materials that could be highly relevant to confirm our suspicions that our proprietary information has been improperly appropriated. It is not too much to ask, in a case like this, that the producing parties take the responsibility of identifying any objectionable materials, isolate them, and produce the rest for our legitimate investigative purposes. In the process of our investigation, finding one clue may lead to another, and another, etc. Providing search terms is a poor substitute for this appropriate process. 5. Against this backdrop, the Special Master reflects upon some basic discovery concepts: in its inception, discovery was conceived as being very broad in scope. Because of abuses, both real and anticipated, safeguards and limitations have been added over the years. However, the basic concept of “open” discovery remains. When you ask for something, basically, you should get it. 6. Another fundamental principle of discovery in play here is the concept that a responding party is not required to produce material that is subject to a privilege or another appropriate objection. Besides privilege, the only other “appropriate objection” mentioned here is relevance (besides the concept of “burden” discussed below). Fundamental to this aspect of the law, the party claiming the privilege has the burden of establishing and protecting it. 7. At the root of the objection by the Individual Defendants to turning over the entire forensic images of the media in question is this: “there is likely a very large amount of completely irrelevant material parked on those many gigabytes of storage media. It will take us a very long time to review all that to guard against material being turned over that is either privileged or totally unrelated to our case. This is an undue burden. There must be a better way. We have already embarked upon what we believe is this better way and now all the work producing thousands of documents will be wasted. We will be starting all over again.” 8. There is logic and truth to this position. However, the Special Master believes the interest of the Plaintiff in attempting to discover and then follow the trail (if it exists) of materials that allegedly have been unlawfully electronically transferred and/or deleted is very high. The Special Master believes the Plaintiff’s position that the use of search terms to attempt to discover the suspected trails is awkward, and has been proven (according to the declarations) to be at least somewhat ineffective. 9. One factor contributing to the analysis is the type of case we are dealing with. First, it is a case involving (at least primarily) electronic data. Second, it is a case involving departing employees who are alleged to have transferred protected date onto their personal storage media and also to have both deleted and further transferred it on. There is some evidence of this general proposition in the deposition of one of the Individual Defendants. Third, it is, at least in significant part, a case dealing with allegations of “missing data” on the media in question. 10. Another factor contributing to the Special Master’s analysis is the obvious fact that none of us knows what is actually contained on the sectors and fragments of the media involved. The Individual Defendants suggest that there is “a lot of totally irrelevant material” parked there. Plaintiffs suggest that there are numerous trails and indications of the past presence of forbidden fruit. No one knows. Without mining through it, neither side really knows what is out there. Matters of such potential importance should not be managed based upon suggestions or suspicions. Nor should they be approached with hit-and-miss methodology, if there is a reasonable alternative. *3 11. The third factor affecting the analysis is the general agreement between both Federal and State law that the trial judge (represented here by the Special Master) has broad discretion to fashion relief in discovery disputes that will fit the specific circumstances of the case and balance the interests and burdens of the affected parties. 12. Here, the Special Master believes this balance can best be achieved by allowing Plaintiff direct access to the forensic images of the media in question, consisting of hard drives and external storage media. The balancing comes in by allowing the Individual Defendants to substantiate their claims of privilege (and possibly relevance) by identifying and excising the objectionable material, together with creating a reasonably detailed log of those materials deleted and why. 13. It is understood that this will be burdensome to the Individual Defendants. However, it is they who have interposed the objections. If we were talking about making a compilation of documents or records, or an extensive media search for discrete information, the Special Master would perhaps shift the economic burden to the requesting party, at least in some degree. Here, we are simply talking about identifying allegedly objectionable material, which should be the burden of the objecting party. 14. While not determining the validity of any objection based upon relevance, the Special Master suggests that material that is thought to be non-relevant but not subject to legal privilege might be just passed on, rather than be made the subject of a potential relevance war. Truly non-relevant material is not likely to receive much attention, and the entirety is covered by the Protective Order in this case. Holding it back will unavoidably create suspicion that will likely lead to a senseless discovery battle. Just a suggestion. The relative harm of letting it through is likely far outweighed by the potential for expensive side-trips to the Special Master. 15. The Special Master has thought of one potentially sensitive area that might be a little murky in terms of privacy protection. In the unlikely event that any of the media contain sexually explicit or pornographic material, the Special Master would consider that to be very personally sensitive and subject to protection under a privacy privilege, absent compelling circumstances that suggest to the contrary in some specific case. 16. To eliminate any ambiguity, the Special Master realizes that this approach will require the creation of an additional forensic image for any media that contain allegedly privileged or otherwise objectionable material. The Individual Defendants will likely also want a mirror copy of that which is turned over to the Plaintiff, as well. The expense of making the images is insignificant against the expenses of reviewing the materials. 17. Finally, with respect to the costs and procedures contemplated by this ruling, the Special Master realizes that both sides will be expending much time and energy reviewing the media in question. This does not appear to be avoidable. However, the Special Master will remain open to further review of the circumstances, both procedurally and economically, once both sides and their IT consultants have had an opportunity to digest the impact of this ruling and how it can best be carried out. So, in other words, the ruling is without prejudice to further refinement, if felt necessary by either side. However, before any such informal discussion takes place with the Special Master and certainly before any motion is filed, the Special Master requires that the meet-and-confer process include meeting and conferring involving the technical advisors for any interested party. It might even be appropriate to have those advisors be participants in any informal telephone conference (if any arises) with the Special Master. RULING *4 18. The Individual Defendants shall provide to Plaintiff forensic images of each of the media in question, subject to the opportunity of the Individual Defendants to eliminate any material for which a privilege or other objection to production is claimed. The forensic image provided shall be made from the first image of the native media, with only the material subject to objection eliminated. 19. For any such material eliminated, the Individual Defendants shall provide at the time of the production of the image in question a log identifying the eliminated material with reasonable particularity, along with a brief statement of the reason for eliminating it. The identification should contain, so far as reasonably possible, the identification of the location on the media of the eliminated material. 20. The Special Master is not setting a time for production. The parties shall meet and confer on this subject and submit any impasse to the Special Master for resolution. It is contemplated that the production will be piecemeal, as the images become available, rather than all-at-once. 21. There is no cost allocation at this time. This ruling is subject to further refinement as discussed above. SPECIAL PROCEDURES FOR THIS CASE 22. Although the parties are considering shortening the time for objections, in accordance with the current order in this case, the parties are required to file any objection to this Proposed Order within 14 court days of its lodging with the Court and service by email upon them. This Proposed Order is being served and lodged on Wednesday, May 11, 2011, making any objection, together with the reasons therefor, due no later than close of court business on Wednesday, June 1, 2011 (that Monday is a holiday). The Response to any Objection is due within 5 court days after email service of the Objection. There is no provision for a reply. Respectfully submitted, Stuart T. Waldrip, Judge (ret.), Special Master The Court approves and accepts the recommendations of the Special Master as the order of this Court and further orders the Clerk to file this document and notify the parties thereof. Moving party to give formal notice to all other interested parties and to the Special Master by email attachment.