All About Information

On February 13, 2008, the Supreme Court of Prince Edward Island (Trial Division) struck a statement of defence as a sanction for non-production. The judgement is notable for its strong statements in favour of full-production despite burden and despite any assignment of particular value to the evidence sought. However, the defendant’s ability to raise proportionality was limited by a number of factors, including that the burden of production appeared to have been caused by a failure to take reasonable preservation steps (i.e. there was a so-called “downgrading” of data). The defendant also raised the burden of production late in the dispute in response a contempt motion.

Thanks again to Peg Duncan for passing this on. Peg edits the case digests on LexUM’s e-Discovery Canada site. Please check them out!

Jay v. DHL, 2008 PESCTD 13 (CanLII).

On March 17th, Mr. Justice Perell upheld an order which allowed a plaintiff’s expert to recover and search data from a defendant’s personal computer.

In furthering its $1 million departing employee claim, the plaintiff had proven that the individual defendant used his personal computer for business purposes. It had also produced e-mails it had received from the defendant that the defendant had not produced himself because they had been deleted. The plaintiff claimed the missing e-mails were relevant to whether the defendant breached his non-solicitation duty. In these circumstances, Master Dash ordered an inspection to be be made by way of a search of recovered e-mails based on client names.

Mr. Justice Perell considered the existing jurisprudence and Sedona Canada Principle 2 (on proportionality) and upheld Master Dash’s order. He said:

Returning to the case at bar, in my opinion, the short endorsement reveals that in ordering an inspection of the computer, Master Dash either: (a) concluded that there was evidence that a relevant document in a party’s possession, control or power may have been omitted from the party’s affidavit of documents; or (b) he balanced a variety of factors to conclude that inspection should be ordered including: the relevance and importance of finding evidence that Mr. Cox had sent e-mails to Vector’s customers; the likelihood that Mr. Cox did send e-mail messages to clients given his admitted use of his personal computer for business purposes; the carefully defined parameters of the inspection; and the plaintiff’s willingness to pay for the costs of the inspection. In my opinion, whether Master Dash did (a) or (b), he applied the law correctly to the circumstances of the case at bar.

Thank you to Peg Duncan for passing this on. Please check out LexUM’s e-Discovery Canada site for its great case law digest and other information related to e-discovery in Canada.

Vector Transportation Services Inc. v. Traffic Tech Inc., 2008 CanLII 11050 (ON S.C.).

On February 28th, the New Brunswick Court of Appeal released the latest award in a long-running e-discovery dispute. It held that the defendants ought to have sought leave to appeal a fairly broad order to provide access to its “computer system.”

The impugned order was made in July 2006 by Savoie J. of the New Brunswick Court of Appeal. The defendants did not appeal, but also did not comply, and in 2007 the plaintiffs brought a motion for contempt. The motion was heard by Lavigne J., who held she could not upset Savoie J.’s order in a collateral motion and rejected the defendants’ argument that costs should be shifted due to the burden of providing access to electronic records. She reserved on the matter of contempt, later rejected in January 2008 (and reported here).

The Court of Appeal agreed with Lavinge J.’s approach. It stated:

In the present case, it may be that the Rules of Court were inadequate to resolve the issues raised by the plaintiff’s original motion and that the Savoie J. [sic] might have been well advised to fashion some relief inspored by [The Sedona Canada Principles and the Ontario Guidelines]. It may be that he could have done so under the authority of Rule 2.04, which provides that “[i]n any matter of procedure not provided for by these rules or by an Act the court may, on motion, give directions.” However, these questions do not arise in this appeal since no one sought leave to appeal Savoie J.’s decision.

Spielo Manufacturing Inc. v. Doucet, [2007] N.B.J. No. 510 (QL) (N.B.C.A.). [Decision not yet published on CanLII.]

On January 18th, the Ontario Superior Court of Justice dismissed a motion requesting that a defendant to a wrongful dismissal claim image all computers, mobile handheld devices and other electronic devices for inspection because it had produced an attachment to a single e-mail without the lead e-mail itself.  The defendant claimed the lead e-mail was blank (containing only the attachment) and had long-since been destroyed.  The Court ordered the defendant to use its best efforts to locate the lead e-mail and dismissed the requested order as speculative.

Ritchie v. 830234 Ontario Inc. (Richelieu Hardware Canada Ltd.), 2008 CanLII 4787 (ON S.C.). 

On January 21st, Master MacLeod of the Ontario Superior Court of Justice issued an order which allowed the parties to a complex e-discovery to proceed. He cited the Sedona Canada Principles and issued a limited order after considering the potential costs and the impact on individual privacy rights that would be associated with a definitive order for more fulsome production.

In litigating a class action claiming product liability damages caused by a heart valve, the plaintiffs brought a motion to challenge the defendants’ production of (1) two clinical trials databases which included adverse events data, (2) questionnaires used to collect adverse event data and (3) a data entry database associated with the adverse events databases. The two clinical trials databases were maintained by the University of Pittsburgh (a non-party) pursuant to a research agreement. Likewise, the questionnaires were held by clinicians thoughout the world pursuant to research agreements. The defendants’ legal rights to the data entry database (called “POP”) were less clear, a significant complication given the University’s residence in a foreign jurisdiction.

There was no dispute that 28 “freezes” of the adverse events databases (representing data stores at a point in time) included highly relevant information, but the plaintiffs claimed that the defendants’ production effort was too slow and that the defendants’ manner of production did not allow them to assess the data’s validity. One of the defendants’ key objections: the University had redacted patient initials and birth-dates from the production. The University did not adduce evidence on the motion, but the defendants argued on the University’s behalf that it would be exposed to liability and a potential breach of U. S. federal or state privacy legislation if it provided the data in unredacted form. The defendants also raised the costs the University was bearing and would additionally bear if further, more fulsome production was to be ordered.

Master MacLeod considered the competing demands and said that the production “solution” should meet four criteria. He said:

• The data produced to the plaintiffs must be substantially the same data as that which has been reviewed by the defendants’ own experts. If not then the plaintiff and defendant experts are being asked to draw conclusions based on different information.
• The forensic continuity of the data must be demonstrable such that any issues about authenticity or accuracy can be readily answered.
• The process of redaction must not leave the data less meaningful or useful. While the exact birth-dates and initials of the patients may not be necessary to analysis of data, it will for example be critical that data attributable to specific patients can still be tracked and where there are associated slides or tissue samples or other medical records produced in the litigation this can be matched to the data in the same way as previous to the redaction.
• The process of redaction must not unduly delay production.

Master MacLeod held that the current manner of production did not meet the criteria. In particular, he took exception to the fact that the defendants’ experts were apparently working with original and unredacted data, which he said could put the plaintiffs at a disadvantage. The defendants’ use of unredacted information may also have led him to conclude that patient privacy, while warranting protection, may ultimately need to yield to “the imperative of justice.”

Master MacLeod’s order was limited in that it merely established a process and criteria to allow the e-discovery to proceed. The key part of the order, for example, read:

In the event the data cannot be produced in redacted form in a timely fashion or if the redactions can be shown to compromise the integrity of the data or if the redacted data is significantly different than the data available to the defence experts, the plaintiff expert is to be given access to complete and accurate copies of the 28 data freezes as well as a current set of data.

There are other aspects of the order that are of significance. For example, Master MacLeod reasoned that the POP database (being potentially controlled by a non-resident) was analogous to deleted or residual electronically stored information as that term is used in Sedona Canada Principle 6. He said, “Only if [the plaintiffs] cannot answer the questions accurately and there remain important unexplained anomalies in the AVERT data should it be necessary to consider production of the POP database.”

For more on the Sedona Conference’s Sedona Canada Principles and for a summary of Master MacLeod’s 2006 order in this same case, see the LexUM E-Discovery Canada website.

Andersen v. St. Jude Medical Inc., [2008] O.J. No. 430 (QL) (S.C.J.).

On January 29th the New Brunswick Court of Queen’s Bench dismissed a contempt motion and a request for sanctions in a protracted discovery dispute.

Based on an earlier motion, decided on July 16, 2006, the defendants were ordered to provide a further and better affidavit of documents and to provide direct access to a computer system (including active and archived data). They did not provide such access and were sluggish in disclosing documents. The plaintiffs then brought a second motion in June 2007, asking the Court to infer malfeasance from the sluggishness and the fact that the defendants had continued to disclose documents after certifying earlier that they did not exist.

The plaintiffs’ motion was initially heard in June but concluded in late December. While the Court remained seized of the motion, in late November and December, the defendants provided two further and better affidavits and provided access to the computer system as previously ordered (without a cost-shifting order as they had requested). The Court held that the plaintiffs had received meaningful production by December 2007 and rejected the plaintiffs’ sanction request.

The Court stressed the high standard for the requested order - framed as a contempt order and striking a defence which the court said had merit. While it held that the defendants were not diligent in preventing electronic information from being downgraded (i.e. altered to be stored in a less accessible form) and even stated that it wondered whether this downgrading was purposeful, it held that this conduct did not merit a contempt order. It also did not draw an inference of malfeasance from the defendant’s sluggishness, recognizing that the discovery task wasn’t easy:

However, as we know, the parties were dealing, amongst other things, with 498 bankers’ boxes of documents and 427 backup tapes that contained information from Spielo’s previous computer system. Certain discrepancies in disclosure, or the misplacement or inadvertent overlooking of a document, is understandable given the enormous volume of material involved in this matter. This is not necessarily indicative of any culpable conduct or malfeasance on the part of the defendants.

While dismissing the motion, the Court did note that cross-examination at trial may shed more light on the issue of deliberate non-disclosure.

Doucet v. Spielo Manufacturing Inc., [2008] N.B.J. No. 27 (QL) (N.B. Q.B.). [CanLII award not yet available.]

On February 4th, the Alberta Court of Appeal dismissed an appeal of an order that allowed a plaintiff in a departing employee case full access to hard drives it had seized earlier in executing an Anton Piller order.

The defendants were initially ordered to produce a further and better affidavit of documents, failing which the plaintiffs would be given direct access to the seized hard drives (subject to confidentiality terms to be agreed upon or ordered). The defendants did not appeal the order and went ahead and negotiated a confidentiality order. The Court later held them to be in breach of the previous order, and confirmed the production order after rejecting arguments that it would be overly burdensome.

The Court of Appeal said, “…the chambers judge’s order is plainly supported by ample evidence. The law as to orders for a further and better affidavit of records also supports the order, as does the earlier order of the case management judge.”

See here for my post on the chambers judge’s decision.

Spar Aerospace v. Aerowerks Engineering Ltd., 2008 ABCA 47.

The Globe and Mail’s Law Page from this morning covers a January 31 decision of the Federal Court in which Madam Justice McTavish set aside a production order obtained by the Commissioner of Competition. She held the Commissioner, who obtained the order under section 11 of the Competition Act by way of an ex parte application, did not make a full and frank disclosure of material facts and made statements that bordered on misrepresentations.

There were three specific bases for McTavish J.’s decision. First, she held that the Commissioner ought to have disclosed a statement it had made in a previous section 11 application that the order obtained on that application would likely be sufficient for its inquiry-related purposes. Second, she held that the Commissioner provided “misleading, inaccurate and incomplete” information on the extent of the overlap between the information it sought and information it already had. Third, she held that the Commissioner ought to have drawn the concerns brought to her attention by the respondent earlier in the year in response to a previous and similarly-broad production order in the same inquiry. Most notably, the respondent had complained that the previous order was so burdensome that its process of retrieving documents had caused its file server to crash and likely involved data restoration costs exceeding $500,000.

The decision stresses the strict burden of disclosure on parties seeking ex parte orders for production, whether in the regulatory or civil context. The part about disclosing expressed concerns about the burden of retrieving electronic documents may apply in a limited number of situations because an ex parte process often starts the course of inquiry or investigation, but it is nonetheless significant given the broader challenges associated with managing the retrieval and production of electronic documents.

The Globe also has commentary by Davies Ward lawyers John Bodrug and Anita Banicevic, linked here. This is part of a recent run of cases on transgressions by regulators related to the seizure of documents. See, for example, my coverage of the Nova Scotia Appeal’s recent decision on a Canada Revenue Agency search here and the Ontario Superior Court of Justice’s December 2007 decision on a Ministry of Labour search here. (Full reasons are still pending in the latter case.)

The Commissioner of Competition v. Labatt Brewing Company Limited, 2008 FC 59.

On January 18, the Nova Scotia Court of Appeal issued a significant judgement on Crown liability for costs on an application to quash a search warrant.

The Court held that the Crown in Right of Canada ought not to be liable for costs of on an application to quash an “ill-conceived and poorly executed” search warrant obtained and executed by the Canada Revenue Agency. It reached this conclusion because a Crown Attorney was not involved in the impugned investigation but, rather, had simply responded to the application to quash.

The Court also said that it did not matter the CRA is a deemed agent of the Crown under the Canada Revenue Agency Act because the basis for an award of costs is rooted in the special role of the Crown as prosecutor:

The basis of this general rule is not that the prosecutor might be an agent of the Crown and that an investigator might not be. The general rule is not based on the law of agency, but on strong reasons of public policy which I have already described, and which have been set out in the cases on many occasions: see, for example, Foster, supra at ¶ 62-65; and Ciarniello, supra, at ¶ 31-36. Whether by virtue of ss. 4(2) of the CRAA, the investigator here was or was not an agent of the Crown (a point I need not decide) does not change the general legal principle applicable to costs against the Crown in criminal matters.

The underlying facts involved a search based on a flawed Information and in which the CRA had seized records subject to solicitor-client privilege contained on computer and electronic storage devices.

R. v. Taylor, 2008 NSCA 5.

The Sedona Canada Principles were launched yesterday and are available on LexUM’s E-Discovery Canada portal (now RSS enabled!). The Principles should play an important role in advancing e-discovery practice in Canada.