Webcast Slides--Gibson Dunn 2012 Year-End Report and Hot Topics
Current E-Discovery Hot Topics and2012 Year-End E-Discovery ReportMoving Beyond Sanctions and Toward Solutions to DifficultProblemsMarch 7, 2013
<Presentation Title/Client Name>22012: Year In Review• Less attention to:– Sanctions• More attention to:– Predictive coding– International e-discovery– Cooperation– Social networking• A sign of things to come?
<Presentation Title/Client Name>4SanctionsLess Dramatic, More Pragmatic, But Still Troubling• No major dramatic opinions in 2012 like those seenin prior years• Still a significant threat hanging over litigants andcounsel– Sanctions awarded in 69 of the 120 cases foundwhere sanctions were sought (57.5%)– Similar rate (though fewer in number) whencompared to 2011 (sanctions granted in 90 of 150cases, or 60%)
<Presentation Title/Client Name>5SanctionsLess Dramatic, More Pragmatic, But Still Troubling44201051405101520253035404550Monetary AdverseInferenceEvidencePreclusionTerminating OtherType and Percentage of Reported Cases Where Sanctions Granted(January 1 –December 31, 2012)
<Presentation Title/Client Name>6SanctionsLess Dramatic, More Pragmatic, But Still Troubling• Monetary Sanctions still most common– e.g., fees and costs• Adverse Inference & Evidence Preclusion– right to impose often “reserved” until entry of evidence• Terminating Sanctions for egregious conduct– e.g., willful destruction of evidence expected to berelevant• Other possibilities to fit specific situations– e.g., reopening discovery or re-deposing witness
<Presentation Title/Client Name>7SanctionsLess Dramatic, More Pragmatic, But Still Troubling• Rambus cases reveal inconsistencies in differentcourts’ treatment of similar conduct• Micron v. Rambus (D. Delaware)– January 3, 2013: case dispositive sanctionsimposed; patents declared unenforceable• Hynix v. Rambus (N.D. California)– September 21, 2012: validity of patentsrecognized; spoliation punished with monetaryformula
<Presentation Title/Client Name>9Proposed Rule Reform• The cost and burden associated with discovery have resultedin a recognition that changes need to be made to the FederalRules of Civil Procedure• Three main themes guiding reform efforts of the Federal RulesCivil Advisory Committee and the Discovery Subcommittee:– Early, hands-on case management– Cooperation– Proportionality/Scope of Discovery• Goal to present comprehensive discovery rule changes forpublic comment later this year
<Presentation Title/Client Name>10Proposed Rule Reform• Proposed Change to Rule 37(e)– Current Rule: “Absent exceptional circumstances, a court may not impose sanctionsunder these rules on a party for failing to provide electronically stored information lost as aresult of the routine, good-faith operation of an electronic information system.”– Proposed Rule:• Absent a finding that the failure to preserve “irreparably deprived a party of anymeaningful opportunity to present a claim or defense” sanctions will only be justifiedwhen the failure to preserve was willful or in bad faith and caused substantial prejudice• Seeks to have a court rely on the Federal Rules as the basis for issuing sanctions, not thecourt’s inherent power• Sets forth five factors for a court to consider when evaluating if the failure to preservewas willful or in bad faith: (1) notice of pending litigation/preservation duty; (2)reasonableness of the party’s efforts to preserve; (3) was there a request to preserve andgood-faith consultation regarding the scope of preservation; (4) proportionality ofpreservation to the scope of litigation; (5) did the preserving party seek timely guidancefrom the court regarding preservation
<Presentation Title/Client Name>11Proposed Rule Reform• Additional changes being considered– Early case management• Promote early conferences with the court on discovery issues• Potentially permit Rule 34 requests for production to be served beforeRule 26(f) conference– Cooperation• Amend Rule 1 to more clearly articulate goal of cooperation– Proportionality• Proposal to modify scope of discovery under Rule 26• Potential inclusion of the concept of proportionality as part of Rule 26• Presumptive limit to 15 interrogatories instead of 25• Presumptive limit to 25 requests for admission (excluding documentauthenticity) and 25 requests for production• Presumptive limit of 5 depositions instead of 10 depositions with aproposal to shorten the permitted length of depositions
<Presentation Title/Client Name>13Search MethodologyHas Predictive Coding’s Time Finally Come?• Predictive Coding Terminology– “Seed set”– “Recall” vs. “precision”– “Stabilization” / “iterative review”• Five considerations from Da Silva Moore v. Publicis GroupeSA, No. 11 Civ. 1279(ALC)(AJP), 2012 WL 607412, at *11(S.D.N.Y Feb. 24, 2012)– The parties’ agreement;– The amount of ESI to be reviewed;– The superiority of computer-assisted review to availablealternatives;– The need for cost-effectiveness and proportionality; and– The transparency of the process.
<Presentation Title/Client Name>14Search MethodologyHas Predictive Coding’s Time Finally Come?• Predictive coding beyond Da Silva Moore– Global Aerospace Inc. v. Landow Aviation, L.P., Consol. Case. No.CL 61040 (Va. Cir. Ct. Apr. 23, 2012) (approving defendants’ useof predictive coding without prejudice to plaintiffs’ raising anissue as to the completeness of defendants’ production).– Kleen Products LLC v. Packaging Corp. of America, Case No. 1:10-cv-05711 (N.D. Ill. Mar. 28, 2012) (denying plaintiffs’ motion foran order requiring defendants to use predictive coding).– In Re: Actos (Pioglitazone) Prods. Liab. Litig., MDL No. 6:11-md-2299 (W.D. La. July 27, 2012) (approving defendants’ use ofpredictive coding pursuant to stipulated protocol).– EORHB, Inc. v. HOA Holdings LLC, Civil Action No. 7409-VCL (Del.Ch. Oct. 15, 2012) (sua sponte ordering the use of predictivecoding and a single discovery vendor).
<Presentation Title/Client Name>15PrivilegeWaiver Is Such Sweet Sorrow• Waiver battles under Federal Rule of Evidence 502(b)– What are “reasonable efforts to prevent disclosure”?– What are “reasonable efforts to rectify” an inadvertent disclosure?• No fault “claw-back” orders under Federal Rule of Evidence 502(d)– May allow parties “to conduct and respond to discovery expeditiously, withoutthe need for exhaustive pre-production privilege reviews, while still preservingeach party’s right to assert the privilege.’” Adair v. EQT Prod. Co., Nos.1:10CV00037, 1:10CV00041, 2012 WL 2526982, at *5 (W.D. Va. June 29,2012).• Privilege and work computers– Employees who have privileged communications on work computers, inviolation of employer policies, generally waive privilege because they have noobjectively reasonable expectation of confidentiality regarding thosecommunications. See, e.g., Chechele v. Ward, No. CIV-10-1286-M, 2012 WL4481439 (W.D. Okla. Sept. 28, 2012).
<Presentation Title/Client Name>17ProportionalityAn Increasingly Important Principle• Proportionality concept reflected in e-discovery pilotprojects, standing orders and proposed amendmentsto the Federal Rules of Civil Procedures Rules26 (scope of discovery) and 37 (sanctions)• Sedona Conference® issued post-public commentversion of its Commentary on Proportionality in Jan.2013• Courts continue to engage in mediating discoverydisputes
<Presentation Title/Client Name>18ProportionalityThe Sedona Conference® Commentary on Proportionality• Sedona Principle One: The burdens and costs ofpreserving potentially relevant information should beweighed against the potential value and uniquenessof the information when determining theappropriate scope of preservation.• Sedona Principle Four: Extrinsic information andsampling may assist in the analysis of whetherrequested discovery is sufficiently important towarrant the burden and expense of its production.
<Presentation Title/Client Name>19ProportionalityNeither one size, nor one precedent, fits all• Detailed assessment of benefit and cost are required– Expert testimony can be helpful• Overbroad discovery requests should not (and willnot) be enforced• Cooperation and open communication with opposingcounsel is encouraged– or required, in some courts
<Presentation Title/Client Name>21PreservationData Sources Proliferate While Case Law Provides Little Specific Guidance• Companies facing challenges to preserveever-increasing number of data sources• Cases continue to provide little guidance on thisissue• Instead, major case law focuses over past year:– Oral vs. written preservation notices– Trigger for preservation obligations– Post-notice follow-up obligations– “Discovery about discovery”
<Presentation Title/Client Name>22PreservationData Sources Proliferate While Case Law Provides Little Specific Guidance• Oral vs. written preservation notices– Continued rejection of Pension Committee’s bright-linerule (e.g., Chin)– Recognition that oral holds may be appropriate in someinstances…– …but in practice courts still very critical of oral holds– Best practice: written preservation notice• Trigger– “Reasonably foreseeable” still the test– Applies to plaintiffs as well as to defendants
<Presentation Title/Client Name>23PreservationData Sources Proliferate While Case Law Provides Little Specific Guidance• Post-notice follow-up obligations– Consensus that “mere circulation of a litigation hold isinsufficient . . . a party must take affirmative steps”– Other than suspending autodeletion, little clarification ofwhat particular follow-up steps courts expect– Some best practices have been developed (e.g., Sedonacommentary legal holds, Sedona principles)• “Discovery about discovery”– Court continue to shield information based on privilege…– …but “growing trend among courts to find the attorney-client privilege is lost when spoliation has occurred”
E-Discovery as a “Cost”Heather L. Richardson24
<Presentation Title/Client Name>25E-Discovery As A “Cost”Statutory Background• What are “costs” that may be awarded to a prevailingparty?– Fed. R. Civ. Pro. 54(d)(1): “[C]osts... should beallowed to the prevailing party”– 28 U.S.C. 1920: including as a cost “fees forexemplification and the costs of making copies.”• What is “exemplification”? What is “making copies”?
<Presentation Title/Client Name>26E-Discovery As A “Cost”Recouping vendor fees and other e-discovery charges as a prevailing party• Race Tires America, Inc. v. Hoosier Racing Tire Corp.,674 F.3d 158 (3d Cir. 2012)– “Making copies” includes:• Scanning• File format conversion (native to TIFF)• Converting VHS to DVD– “Exemplification” does not include:• Electronic vendor discovery work (includingkeyword searches, preservation and collection)
<Presentation Title/Client Name>27E-Discovery As A “Cost”Recouping vendor fees and other e-discovery charges as a prevailing party• After Race Tires…– Country Vintner of North Carolina v. E. & J. Gallo Winery,Inc., No. 5:09-CV-326-BR, 2012 U.S. Dist. LEXIS 108905(E.D. N.C. Aug. 3, 2012)– Johnson v. Allstate Ins. Co., No. 07-cv-0781-SCW, 2012 U.S.Dist. LEXIS 148282 (S.D. Ill. Oct. 16, 2012) (awarding “costsof converting data into readable format”)– El Camino Resources, Ltd. v. Huntington Nat’l Bank, No.1:07-cv-598, 2012 U.S. Dist. LEXIS 146037 (W.D. Mich. May3, 2012)– Gabriel Techs., Corp. v. Qualcomm, Inc., No. 08CV1992, AJB(MDD), 2013 WL 410103 (S.D. Cal. Feb. 1, 2013)
<Presentation Title/Client Name>29Social MediaCourts Adapt Traditional Discovery Rules to New Technology• As use of social media by individuals and companiesproliferates, the number of cases involving discoveryof social media continues to grow• Courts have become more successful at adaptingdiscovery rules and procedures to social media• Some examples:– Preservation and spoliation– Authentication– Collection of data
<Presentation Title/Client Name>30Social MediaCourts Adapt Traditional Discovery Rules to New Technology• Preservation & Spoliation– Dynamic nature of social media makes preservationdifficult– At least one court has ordered a party to recreate aFacebook page as it previously existed (Katiroll Co. v. KatiRoll & Platters)• Authentication– Some courts require a showing of authentication such assearching the individual’s hard drive or seekinginformation from the commercial host– Others are less strict
<Presentation Title/Client Name>31Social MediaCourts Adapt Traditional Discovery Rules to New Technology• Collection of data– Four approaches:• requiring account holder to produce the informationthemselves• appointing a neutral expert to review and collect thedata• permitting requesting party access to the social mediaaccount• third party subpoena to commercial host– The trend is moving toward requiring the account holderto review his own account and produce any relevantinformation
<Presentation Title/Client Name>33CooperationMore Than Just Nice Words• More than just a lofty ideal; courts are actually taking steps tofoster cooperation.• The idea is increasingly becoming the subject of pilotprograms, standing orders, proposed rule changes (Rule37(e)), and other broadly-applicable policies.• Courts are focusing on the specifics of cooperation—gettingparties to agree on custodians or form of production;imposing cost-shifting or sanctions when parties do notcooperate—rather than just issuing generalized calls forcooperation.
<Presentation Title/Client Name>34CooperationCourts Taking the Initiative• Pilot programs, standing orders, meet-and-conferrequirements, other policies (District of Delaware defaultstandards; Nassau County, NY Guidelines)• “Forcing cooperation”: courts requiring parties to discuss e-discovery issues, including form of production, and attempt toseek agreement before coming to court (Northern District ofCalifornia checklist)• More than just Rule 26(f).
<Presentation Title/Client Name>35CooperationFormat of Production• Courts expect parties to agree on the form of production(metadata, native vs. TIFF files, etc.)• Courts may set basic production parameters and look to the partiesto work out the rest. Da Silva Moore v. Publicis Groupe, No. 11 Civ.1279 (ALC) (AJP), 2012 WL 607412, at *22 (S.D.N.Y. Feb. 24, 2012);Navajo Nation v. United States, No. 06–945L, 2012 WL 5398792, at*3 (Fed. Cl. Oct. 17, 2012).• As predictive coding and other forms of technology-assisted reviewbecome more prevalent, courts may increasingly expect parties toresolve many, if not most, reviewprotocol-related issues consensually.
<Presentation Title/Client Name>36CooperationThe Threat of Sanctions• Courts do not seem to be sanctioning litigants for failing to cooperate, perse.• However, courts have taken such a failure into account when resolvingdiscovery disputes, commenting negatively on one or both parties’ failureto cooperate. See, e.g., Vasudevan Software, Inc. v. Microstrategy Inc., No.11-cv-06637-RS-PSG, 2012 WL 5637611, at *6 (N.D. Cal. Nov. 15, 2012).• And in at least one case, a party used the other side’s failure to cooperateas a defense against sanctions. Borwick v. T-Mobile West Corp., No. 11-cv-01683-LTB-MEH, 2012 WL 3984745 (D. Colo. Sept. 11, 2012).
<Presentation Title/Client Name>38International E-DiscoveryThe Cross-Border Conundrum• Increasingly common need to preserve, collect and review ESIlocated in foreign jurisdictions.• In many non-U.S. jurisdictions data privacy is viewed as afundamental right and personal data is afforded greaterprotection than we are accustomed to in the U.S.• U.S. courts, however, usually will not accept the operation offoreign data privacy law as an “excuse” for failing to producerelevant information located in a foreign jurisdiction.
<Presentation Title/Client Name>39International E-DiscoveryThe Cross-Border Conundrum• In litigation and investigations, foreign data privacy laws,“blocking statutes,” and other laws (e.g., China’s state secretslaw) may impact several aspects of the e-discovery life cycle:– Preservation– Collection– Review– Transfer out of the jurisdiction– Production
<Presentation Title/Client Name>40International E-DiscoverySolutions• Foreign data privacy laws typically apply to “processing” of“personal data”• Compliance can often be achieved through taking steps to renderprocessing “legitimate” under data privacy law.• Notification to the Data Protection Authority (“DPA”) and ObtainingConsent of DPA may be necessary.• The Sedona Conference’s International Principles (Dec. 2011)provides guidance for a “legitimization plan:”– Confidentiality Order in U.S. litigation– Processing, Culling and Review in Foreign Jurisdiction– Redact Personal Information if Possible• EU DPAs reacted positively to the InternationalPrinciples in 2012.
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