Not Just Another E-Discovery Presentation January 26, 2010 Carla Ashley Sarah Brehm
Where are we now?
Where have we come from?
Electronically stored information
Trend away from physical documents in file cabinets
Word processing & Office Suite
Local drives and network drives
Contact management system (Outlook)
Cell phone and PDA databases
Time & billing systems
Voice mail systems
GPS navigation systems
Social and business networking sites
What is ESI?
What has changed?
Not a new concept
U.S. v. Vela , 673 F.2d 86 (5 th Cir. 1982)
Court admitted computerized telephone bills under the FRE 803(6) Business Records exception where a telephone company employee laid the proper foundation for the reliability of the telephone bills record-keeping process.
In describing the reliability of the computer-generated documents, the court stated that the computerized reports “would be even more reliable than . . . . average business record(s) because they are not even touched by the hand of a man.”
A new example… text messages
Quon v. Arch Wireless Operating Co., Inc. , 529 F. 3d 892 (9 th Cir. 2008), cert granted , 2009 WL 1146443 (U.S. Dec. 14, 2009) (No. 08-1332).
Implications for the discoverability of employee text messages on company-provided cell phone or PDA
Storage of content by service provider
Awareness of issues – uninformed about how to respond once litigation is reasonably anticipated
Document retention policy vs. ESI discovery readiness
Most companies do not have a method to suspend document retention/destruction policies
Who is responsible? Employees, In-house counsel, IT, Outside counsel
Discovery policy with a repeatable process can mitigate risk and promote effective preservation and collection of ESI
1424 – scope of discovery (ESI attorney work product, privilege log, & clawback provision)
1425 – experts (drafts, communications, notes, ESI that would reveal attorney opinion work product)
1460 – option to produce records (adds ESI)
1461 – requests for production (adds ESI, sound recordings, images – any medium)
1462 – specify form (e.g. native) & exception for 1461 permitting direct access (motion to compel)
1471 – sanctions for failure to comply with order compelling discovery (good faith)
1551 – control and scheduling of discovery (meet & confer)
Louisiana Code of Civil Procedure
La. R.S. 9:2603.1 (Act 401, eff. 8/15/09)
Allows for electronic warrant applications, signatures, and records
Requires security procedures to insure authenticity of digital signature (encryption)
Electronic record received when “the record enters an information-processing system that the local court rules have designated and approved for the purpose of receiving electronic applications for warrants and from which the recipient is able to retrieve an electronic record.”
Federal Rule of Civil Procedure 26
F.R.C.P. 26(f): Conference of the Parties; Planning for Discovery
“ The parties must, as soon as practicable and in any event at least 21 days before a scheduling conference…confer to consider the nature of their claims and defenses and possibilities for settlement or resolution…to make disclosures required by Rule 26(a)(1), to discuss any issues relating to preserving discoverable information, and to develop a proposed discovery plan…”
Federal Law: Rules 26, 16, and Form 35
Discovery Plan. A discovery plan must state the parties’ views and proposals on:
(C) any issues about disclosure or discovery of electronically stored information, including the form or forms in which it should be produced;
26(f): counsel should “as soon as practicable” address during early conferences (preservation, form, searches, privilege, discovery plans, protocols, etc.)
Form 35: encourages reporting to Court (after Rule 26(f) conference)
16: item for Court to address in scheduling orders and/or CMO
Rule 26(b)(5)- mechanism for returning, sequestering, and destroying privileged ESI that is inadvertently produced
Murphy Oil USA v. Fluor Daniel , 2:99-cv-03564 (E.D. La. Dec. 3, 2002) (following order to the defendant to produce relevant email communications archived in backup tapes, 2002 WL 246439)
Plaintiff sought production of a particular email in motion to compel. Argued that that defendant waived attorney-client privilege by voluntarily producing the contents of the email.
Does use of work e-mail waive any privilege?
four factor test to balance the expectation of privacy against the lack of confidentiality:
(1) Is there a company policy banning personal use of e-mails?;
(2) Does the company monitor the use of its e-mail?;
(3) Does the company have access to all e-mails?; and
(4) Did the company notify the employee about these policies?
See In re Asia Global Crossing, LTD., 332 B.R. 247, 257 (S.D.N.Y.2005).
Stengart v. Loving Care Agency, Inc. , 2009 WL 1811064 (N.J. Super A.D. June 26, 2009), but see Alamar Ranch, LLC v. County of Boise , 2009 WL 3669741 (D. Idaho Nov. 2, 2009).
Rules 34 & 37
Rule 34 provides that when there is no specification of the form in which ESI should be produced, a responding party “must produce documents as they are kept in the usual course of business ....” Rule 34(b)(2)(E)(i) .
In addition, Rule 34 requires that the ESI must be produced in a “form or forms in which it is ordinarily maintained or in a reasonably usable form or forms.” Fed.R.Civ.P . 34(b)(2)(E)(ii) .
Rule 37: “Good faith in the routine operation of an information system may involve a party’s intervention to modify or suspend certain features of that routine operation to prevent the loss of information, if that information is subject to a preservation obligation.”
When does duty to preserve begin?
Zubulake v. UBS Warburg LLC, 2004 U.S. Dist. LEXIS 13574 (S.D.N.Y. 2004) ( Zubulake V) :
“ First, when litigation is reasonably anticipated or at the commencement of litigation, counsel must issue a ‘litigation hold’ which should be periodically re-issued to keep it fresh in the minds of employees and to make new employees aware of it.”
Fed. R. Civ. P. 26(b)(2)(B)
Tier I requires that a party must provide discovery of relevant, and reasonably accessible ESI, and it recognizes that “[e]lectronic storage systems often make it easier to locate and retrieve information,” and this should be “taken into account in determining reasonably the scope of the discovery.” Advisory Comm. Notes to 2006 amendment
Tier II ESI “can be accessed only with substantial burden and cost.” The burden is on the responding party to “identify and provide enough detail to enable the requesting party to evaluate the burdens and costs of providing the discovery and the likelihood of finding responsive information on the identified sources.” Id.
“ Reasonably accessible” is not defined—look to jurisprudence
Sources that may not be reasonably accessible include:
ESI that has been deleted, but still physically exists on a hard drive and can be restored using forensic techniques;
Backup tapes that are not used as active data stores;
Data from obsolete systems;
ESI that requires specific software and/or hardware to access and the license for such use has a substantial cost.
From Zubulake I
What Courts Expect
Legal and technical personnel will work together to satisfy investigation and disclosure obligations
Production of electronic info "should be at the forefront of any discussion of issues involving discovery and trial ...." (In re Bristol-Myers Squibb Securities Litig., D.N.J. 2002)
“ A corporation must search all of its departments , not just its legal department, when a party requests information about other claims during discovery. Here Hyundai searched only its legal department.”
Maga%25na v. Hyundai Motor America , 220 P. 3d 191 (Wash. November 25, 2009)
$8 million default judgment against Hyundai
This Rule Has Teeth
Recent Cases – Sanctions
Kipperman v. Onex Corp., 2009 WL 1473708 (N.D. Ga. May 27, 2009).
Court found defendant blatantly disregarded court orders by making misrepresentations during discovery
While deeply disturbed by defendant's "textbook case of discovery abuse,” court declined imposition of default judgment sanctions based on the novel issues of liability
Awarded $1,022,700 in monetary sanctions against the defendant to be paid to the plaintiff
When dismissal may be warranted
Kipperman citing 5 th Circuit:
Dismissal or non-monetary sanctions that are the equivalent of dismissal should be used sparingly and only in situations where their deterrent value cannot be substantially achieved by use of less drastic sanctions . Marshall v. Segona , 621 F.2d 763, 768 (5th Cir.1980) . Although this issue is not dispositive, the court should consider whether the other party's preparation for trial was substantially prejudiced by the sanctionable conduct. Id. A court should not use the sanction of dismissal where the sanctionable party's actions are due to “simple negligence, grounded in confusion or sincere misunderstanding of the Court's orders” or where the party's failure to comply was due to inability, for example where requested information is not yet available, though it will later become so. Id. A sanction of dismissal or default judgment requires a willful or bad faith failure to obey a discovery order. Malautea , 987 F.2d at 1542. In addition, the Supreme Court has interpreted the Rule 37 requirement of a “just” sanction to require “general due process restrictions on the court's discretion.” Id.
Defendants have blatantly ignored orders of the court and prompted multiple motions to compel.
Defendants' only defense is their unpersuasive argument that they have now complied and Plaintiff has suffered no prejudice.
Defendants' defense completely ignores the burdens the court and Plaintiff have endured to garner their compliance and the destructive precedent this court would set were it to allow Defendants to escape the consequences of three years of bad behavior simply because they believe they have now complied.
Pesky little clause
Ad damnum clause hundreds of millions of dollars. Were this court to avoid trying this case on the merits, it might be granting the largest default judgment sought by a plaintiff in the history of the nation.
As this matter currently stands, Plaintiff has the raw material and documentation it needs to proceed with its case and this court has the means, through re-depositions and supplemental expert reports, to minimize a large portion of the damage done.
The court is simply unwilling to take the dramatic action of striking Defendants' answer and entering default in the face of moderate prejudice. That being said, Defendants should not and will not go unpunished. The court will exercise its discretion under Rules 26 and 37 and its inherent powers to award monetary sanctions.
Bradley v. Sunbeam Corp. , 2003 U.S. Dist. LEXIS 14451 (N.D. W.V. 2003) (attorney sanctioned $200,000 for assisting client with document destruction and continuation of document destruction policy after receiving notice of litigation)
Bray & Gillespie Mgmt., LLC v. Lexington Ins. Co. , 259 F.R.D. 568 (M.D. Fla. March 4, 2009) (attorneys sanctioned for manipulating documents – evidence insufficient to sustain finding of bad faith or imposition of sanctions against counsel)
Per our agreement, all documents will be provided by sending discs containing scanned copies of the documents; no hard copies of the documents will be provided [emphasis added].”
Plaintiff did not produce all documents as scanned copies. Rather, its attorneys manipulated ESI to convert the searchable text with metadata to a TIFF image stripped of metadata.
Ediscovery Expert Ordered
Maggette v. BL Development Corp. , 2:07-cv-182, 2009 WL 4346062 (N.D. Miss. Nov. 24, 2009)
Plaintiffs filed motion to strike & requested sanctions
Judge openly suspicious of defendants' lack of evidence, did not sanction defendant but ordered defendant to pay for the services of a third-party e-discovery expert to answer some very basic questions posed by the court
Justify Your Methods - Maggette
Make sure litigation hold procedures are transparent and communicated to the court as early as possible
defendants are unable to describe the databases searched, the search terms, methods or parameters used to search the databases or provide any expert information confirming that there are no documents, electronically stored information or other information responsive to plaintiffs' discovery requests
defendants have not provided any concrete reason or rationale for the numerous discrepancies within their discovery responses and the deposition testimony of their own employees. Nor has defendant articulated a satisfactory response to the court's doubts expressed at the hearing that corporations as large and sophisticated as the defendants, which operate numerous gaming facilities across the country with various operations centers, do not have either paper files, electronic files or information or -- even in light of Hurricane Katrina -- backup measures and files for at least some of the information requested by plaintiffs.
The Death Penalty
Doppes v. Bentley Motors, Inc. , 94 Cal. Rptr. 3d 802 (Cal. App. 4 th Dist. June 8, 2009)
In this case, we make the extraordinary, yet justified, determination that the trial court abused its discretion by failing to impose terminating sanctions against defendant for misuse of the discovery process. The record demonstrates defendant engaged in repeated and egregious violations of the discovery laws that not only impaired plaintiff's rights, but threatened the integrity of the judicial process.
Consumer sued for odor in car, appellate court instructed trial court to issue default judgment
Blank is Suspicious
Plaintiff sought sanctions alleging laptops and BlackBerry® smartphoneswere wiped of data
Court relied upon explanations provided by computer forensics experts that the “wiped” state of the media was deliberate and intentional
Issued an adverse inference instruction, after determining the nature of the evidence (including personal e-mails, text messages and calendar entries) was likely unfavorable to the defendants Se. Mech. Servs., Inc., v. Brody , 2009 WL 2883057 (M.D. Fla. Aug. 31, 2009).
“ The lack of a written document retention and litigation hold policy and procedures for its implementation, including timely reminders or even a single e-mail notice to relevant employees , exemplifies Defendants’ lackadaisical attitude with respect to discovery of these important documents.”
Court awarded sanctions
Court made adverse inference instruction
Keithley v. The Home Store.com, Inc. , 2008 WL 3833384 (N.D. Cal. August 12, 2008)
“ Defendants had a duty to notify and periodically remind technical personnel of Defendants’ preservation obligation and ensure that they took adequate steps to safeguard the data. At a minimum, Defendants were reckless in their conduct … Had Defendants imposed a proper litigation hold in this case, the evidence on the Development Computer, … would have been preserved. Instead, evidence of prior versions of source code was destroyed .”
Kevin Keithley v. The Home Store.com, Inc. , 2008 WL 3833384 (N.D. Cal. August 12, 2008)
Good Faith – Lessons from Qualcomm
“ The Federal Rules of Civil Procedure require parties to respond to discovery in good faith . . . [which] is heightened in this age of electronic discovery when attorneys may not physically touch and read every document within the client’s custody and control. For the current ‘ good faith’ discovery system to function in the electronic age, attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents.”
Qualcomm Inc. v. Broadcom Corp. , 2008 U.S. Dist. LEXIS 911 (S.D. Ca. January 7, 2008)
Rule 1.1 COMPETENCE: A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.
Rule 1.3 DILIGENCE: A lawyer shall act with reasonable diligence and promptness in representing a client.
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, “[I]t is time that the Bar – even those lawyers who did not come of age in the computer era – understand this.” William A. Gross Constr. Assocs., Inc. v. Am. Mfrs. Mut. Ins. Co., 2009 WL 724954 (S.D. N.Y March 19, 2009).