Electronic Document Retention And Legal Holds


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Overview of the duty to preserve records, the Seven Steps of a legal hold business process and basic evidence for the admissibility of electronic evidence (aka ESI)

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  • Introduction:
  • Electronic Document Retention And Legal Holds

    1. 1. www.GoldbergSegalla.com Electronic Document Retention and Rules of Evidence Presented by: John J. Jablonski, Esq. PHILADELPHIA – NEW YORK – BUFFALO – ROCHESTER – SYRACUSE – ALBANY – WHITE PLAINS – LONG ISLAND – PRINCETON – HARTFORD – AFFILIATED EUROPEAN OFFICES
    2. 2. <ul><li>AGENDA </li></ul><ul><li>Preserving Documents: What is a Hold Policy? </li></ul><ul><li>Destroying Documents: Spoliation and Recent Court Decisions Shaping Preservation of Records / Legal Hold Practices </li></ul><ul><li>Presenting Electronic Evidence </li></ul>
    3. 3. Are Legal Hold’s Necessary? <ul><li>Current Trends </li></ul><ul><li>Document Destruction </li></ul><ul><li>Duty to Preserve Documents </li></ul><ul><li>Balancing Act </li></ul><ul><li>Reasonable Anticipation of Litigation </li></ul><ul><li>Drawing the Line </li></ul>
    4. 4. 1. What is a Hold Policy? <ul><li>Sample definition recommended to a client : </li></ul><ul><li>“ Suspends routine destruction of Records and other documents upon a finding that such suspension is necessary under applicable law due to actual or reasonably anticipated litigation or governmental investigation (or audit, for any documents not otherwise appropriately retained under a Tax Audit Record Series). </li></ul><ul><li>To be reasonably anticipated, particular litigation or investigative proceedings related to specific facts and circumstances must be anticipated, and not the mere fact that litigation regarding a particular topic is a general possibility. The Legal Department shall wholly or partially release a Legal Hold and issue instructions to return to routine retention those released Records and other documents immediately after the matter has been wholly or partially resolved.” </li></ul>
    5. 5. 2. Spoliation of Evidence <ul><li>Where courts have great discretion, at minimum, to impose sanctions for destroying records relevant to pending or potential litigation. </li></ul><ul><li>Some states recognize it as a separate cause of action, while others simply give courts discretion on how to punish the parties involved. </li></ul><ul><li>New York Has Yet to Adopt a Separate Cause of Action. </li></ul>
    6. 6. Spoliation Sanctions <ul><li>Evidentiary or legal sanctions </li></ul><ul><ul><li>Not allowing documents introduced at trial </li></ul></ul><ul><ul><li>Special jury instructions or assumptions </li></ul></ul><ul><ul><li>Adverse Inference Charge </li></ul></ul><ul><li>Financial sanctions </li></ul><ul><li>Fines per Statute (e.g., $5 mill per S-Ox) </li></ul><ul><li>Imprisonment per Statute (e.g., 20 yrs per S-Ox) </li></ul><ul><li>New lawsuit in states where available </li></ul><ul><li>Report to State Bar (it is unethical to destroy evidence) </li></ul>
    7. 7. The Duty to Preserve Continuum <ul><li>Statutory or regulatory obligations to preserve </li></ul><ul><li>Statutes of limitations </li></ul><ul><li>Duty arising from potential or threatened litigation or investigation </li></ul><ul><li>Duty created by preservation letter from opposing counsel or agency </li></ul><ul><li>Duty created by service of a complaint and resulting civil discovery statutes, discovery requests or court orders </li></ul><ul><li>Items 3 to 5 should trigger legal holds. </li></ul>
    8. 8. What is Foreseeable Litigation? <ul><li>General Guidelines per Zubulake & Sedona Principles </li></ul><ul><ul><li>Sedona Principle #5 </li></ul></ul><ul><ul><li>Zubulake IV </li></ul></ul>
    9. 9. Sedona Principle #5 <ul><li>“ The obligation to preserve electronic data and documents requires reasonable and good faith efforts to retain information that may be relevant to pending or threatened litigation. However, it is unreasonable to expect parties to take every conceivable step to preserve all potentially relevant data.” </li></ul>
    10. 10. Duty to Preserve Documents <ul><li>Zubulake IV (SDNY 2003) 220 F.R.D. 212, 216 </li></ul><ul><li>“ Identifying the boundaries of the duty to preserve involves two related inquiries: </li></ul><ul><li>1. When does the duty to preserve attach, and </li></ul><ul><li>2. What evidence must be preserved?” </li></ul><ul><li>Citing Fujitsu v. Fedex (2d Cir. 2001) 247 F.3rd 423. </li></ul>
    11. 11. Foreseeable Litigation in General <ul><li>Zubulake IV (SDNY 2003) 220 F.R.D. 212, 216 </li></ul><ul><li>“ The obligation to preserve evidence thus arises: </li></ul><ul><li>When the party has notice that the evidence is relevant to litigation; or </li></ul><ul><li>When a party should have known that the evidence may be relevant to future litigation.” </li></ul>
    12. 12. 1. Trigger Event 2. Analyze Duty To Preserve 3. Define Scope 4. Implement Hold 5. Enforce & Examine 6. Modify NO Implementation / Oversight / Training / Audit / Tracking / Legal Hold Releases Preservation Not Required YES 7. Monitor & Remove
    13. 13. Step 1: Identify Trigger Events <ul><li>Filing an Administrative Claim; </li></ul><ul><li>Organizational Knowledge of Potential Claim; </li></ul><ul><li>Conversations With Supervisors; </li></ul><ul><li>Retainer of Counsel and Experts; </li></ul><ul><li>Compiling a List of Opponents to Sue; </li></ul><ul><li>Threat to Sue Letter; </li></ul><ul><li>Prior Events That Have Led to Litigation; </li></ul><ul><li>Industry Wide Litigation; </li></ul><ul><li>Agency Investigation; and </li></ul><ul><li>Service of a Lawsuit. </li></ul>
    14. 14. Step 2: Analyze Dute to Preserve <ul><li>Who determines whether a legal hold is necessary? </li></ul><ul><li>Collect Facts To Make Determination </li></ul><ul><li>Organizational Analysis </li></ul><ul><li>Legal analysis </li></ul>
    15. 15. Step 3: Define Scope Hold <ul><li>Scope to be determined on a case by case analysis… Examples include: </li></ul><ul><ul><li>Email </li></ul></ul><ul><ul><li>System Log Data </li></ul></ul><ul><li>Possible Data Locations </li></ul><ul><li>What is reasonable? </li></ul><ul><li>Records and Other ESI Requiring Special Attention </li></ul>
    16. 16. <ul><li>Copyright infringement case filed 2/06 </li></ul><ul><li>Held that preservation duty creates obligation to modify or suspend features or routine operation of electronic systems </li></ul><ul><li>Data stored temporarily in RAM for 6 hours (not Preserved) </li></ul><ul><li>Notified to preserve server log data 5/06 </li></ul><ul><ul><li>IP addresses of users of def’s website </li></ul></ul><ul><ul><li>Request for dot-torrent files </li></ul></ul><ul><ul><li>Dates and times of requests </li></ul></ul>Columbia Pictures v. Bunnell (2007)
    17. 17. <ul><li>There was no prior precedent for RAM discovery </li></ul><ul><li>There was no specific request or discovery to preserve the data at issue </li></ul><ul><li>There was no violation of a preservation order </li></ul><ul><li>Decision recently upheld on appeal </li></ul>Columbia Pictures v. Bunnell (Cont’d.)
    18. 18. Step 4: Implement Hold <ul><li>Who issues Hold order? </li></ul><ul><li>Who receives Hold order? </li></ul><ul><li>Form of Hold orders (notices & content) </li></ul><ul><li>Coordinating with IT </li></ul><ul><li>Technical Considerations (the Data Map) </li></ul><ul><li>Interview Key Witnesses </li></ul>
    19. 19. Step 5: Enforce and Examine Effectiveness of the Hold <ul><li>Interview Key Witnesses </li></ul><ul><li>Get Together with IT </li></ul><ul><li>Consult with Legal Hold Oversight Committee </li></ul>
    20. 20. Step 6: Modify the Legal Hold <ul><li>Re-check scope of Distribution </li></ul><ul><li>Broadening or Narrowing </li></ul><ul><li>Adding Custodians </li></ul><ul><li>Discussions with Potential Litigants </li></ul><ul><li>Court Orders </li></ul><ul><li>Modify Scope of Records </li></ul>
    21. 21. Step 7: Monitor / Remove <ul><li>Audits </li></ul><ul><li>Record Hold Reminders </li></ul><ul><li>Issuance to New Employees </li></ul><ul><li>Narrow Over Time </li></ul><ul><li>Monitor Holds and Re-Check </li></ul><ul><li>Management of Terminated Employees </li></ul><ul><li>Releasing Legal Holds </li></ul><ul><li>The Cascading Hold Dilemma </li></ul>
    22. 22. Evidence 101 <ul><li>1. Is the ESI relevant ? (Rule 401); </li></ul><ul><li>2. Is it authentic ? (Rule 901); </li></ul><ul><li>3. Is it hearsay , being offered for its substantive truth? (Rule 801) (If hearsay, does an exception apply? (Rules 803, 804 and 807); </li></ul><ul><li>4. Is the ESI an original or duplicate ? If not, is there admissible secondary evidence to prove the content of the ESI? (Rules 1001-1008); and </li></ul><ul><li>5. Is the probative value of the ESI substantially outweighed by the danger of unfair prejudice ? (Rule 403). </li></ul>
    23. 23. 2. Authentic Rule 901. Requirement of Authentication or Identification <ul><li>(a) General provision. </li></ul><ul><li>The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims. </li></ul><ul><li>(b) Illustrations. </li></ul><ul><li>By way of illustration only, and not by way of limitation, the following are examples of authentication or identification conforming with the requirements of this rule: </li></ul>
    24. 24. Rule 901. Requirement of Authentication or Identification <ul><li>(1) Testimony of witness with knowledge. </li></ul><ul><li>Testimony that a matter is what it is claimed to be. </li></ul><ul><li>NOTE: A court may deem a lay witnesses testimony insufficient to address the underlying foundation necessary to admit electronically stored information into evidence. See Bazak Int’l Corp. v. Tarrant Apparel Group, 378 F.Supp.2d 377 (SDNY 2005) (holding that the authenticity of e-mail could not be determined by witness affidavit where a witness was not designated as an “expert witness.”) </li></ul>
    25. 25. Rule 901. Requirement of Authentication or Identification <ul><li>(3) Comparison by trier or expert witness . </li></ul><ul><li>Comparison by the trier of fact or by expert witnesses with specimens which have been authenticated. </li></ul>
    26. 26. Rule 901. Requirement of Authentication or Identification <ul><li>(7) Public records or reports. </li></ul><ul><li>Evidence that a writing authorized by law to be recorded or filed and in fact recorded or filed in a public office, or a purported public record, report, statement, or data compilation, in any form, is from the public office where items of this nature are kept. </li></ul>
    27. 27. Rule 901. Requirement of Authentication or Identification <ul><li>(4) Distinctive characteristics and the like . </li></ul><ul><li>Appearance, contents, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances. </li></ul>
    28. 28. Rule 901. Requirement of Authentication or Identification <ul><li>Process or system . </li></ul><ul><li>Evidence describing a process or system used to produce a result and showing that the process or system produces an accurate result. </li></ul>
    29. 29. Rule 902. Self-Authentication <ul><li>Extrinsic evidence of authenticity as a condition precedent to admissibility is not required with respect to the following: </li></ul><ul><li>Certified domestic records of regularly conducted activity. </li></ul><ul><li>The original or a duplicate of a domestic record of regularly conducted activity that would be admissible under Rule 803(6) if accompanied by a written declaration of its custodian or other qualified person, in a manner complying with any Act of Congress or rule prescribed by the Supreme Court pursuant to statutory authority, certifying that the record: </li></ul>
    30. 30. Rule 902. Self-Authentication <ul><li>(11) Certified domestic records of regularly conducted activity. </li></ul><ul><li>Continued… </li></ul><ul><li>(A) was made at or near the time of the occurrence of the matters set forth by, or from information transmitted by, a person with knowledge of those matters; </li></ul><ul><li>(B) was kept in the course of the regularly conducted activity; and </li></ul><ul><li>(C) was made by the regularly conducted activity as a regular practice. </li></ul>
    31. 31. <ul><li>“ Computerized data” raises unique issues concerning accuracy and authenticity. </li></ul><ul><li>Accuracy may be impaired by incomplete data entry, mistakes in output instructions, programming errors, damage and contamination of storage media, power outages, and equipment malfunctions. </li></ul><ul><li>The integrity of data may also be compromised in the course of discovery by improper search and retrieval techniques, data conversion, or mishandling. </li></ul><ul><li>The proponent of computerized evidence has the burden of laying a proper foundation by establishing its accuracy. </li></ul>
    32. 33. In re Vee Vinhnee, 336 B.R. 437 (9th Cir. BAP 2005) <ul><li>Most federal courts admit computer records under Fed. R. Evid. 803(6) on a showing that they are business records kept pursuant to a routine procedure for reasons that tend to assure their accuracy. See, e.g., United States v. Salgado, 250 F.3d 438, 452 (6th Cir. 2001); United States v. Destnik, 36 F.3d 904, 909-10 (10th Cir. 1994). </li></ul><ul><li>Vinhnee is a significant departure from this permissive approach. </li></ul><ul><li>An American Express employee testified, as custodian of records, that the entries in computerized credit card records were made at or about the time of the transactions, and that the records were kept in the ordinary course of business pursuant to a regular business practice. </li></ul><ul><li>The debtor did not object (he didn't appear for trial), the bankruptcy court sua sponte required additional foundational testimony regarding the computer, software and procedures to assure continuing accuracy of the data. </li></ul><ul><li>After supplementing the record the bankruptcy court excluded the electronic records and entered judgment for the debtor, adding &quot;salt to the wound&quot; by noting that American Express &quot;would have prevailed on one of two counts if the records had been admitted.&quot; 336 B.R. at 440. </li></ul>
    33. 34. <ul><li>business uses a computer. </li></ul><ul><li>computer is reliable. </li></ul><ul><li>business has developed a procedure for inserting data into the computer. </li></ul><ul><li>procedure has built-in safeguards to ensure accuracy and identify errors. </li></ul><ul><li>business keeps the computer in a good state of repair. </li></ul><ul><li>witness had the computer readout certain data. </li></ul><ul><li>witness used the proper procedures to obtain the readout. </li></ul><ul><li>computer was in working order at the time the witness obtained the readout. </li></ul><ul><li>witness recognizes the exhibit as the readout. </li></ul><ul><li>10. witness explains how he or she recognizes the readout. </li></ul><ul><li>11. If the readout contains strange symbols or terms, the witness explains the meaning of the symbols or terms for the trier of fact. </li></ul>In re Vee Vinhnee at 446-47
    34. 35. <ul><li>E-Mail </li></ul><ul><li>Monotype Corp. PLC v. Int'l Typeface, 43 F.3d 443, 450 (9th Cir. 1994) (affirming trial court's exclusion of e-mail as inadmissible as a business record); </li></ul><ul><li>U.S. v. Safavian, 435 F.Supp.2d 36 (DDC 2006) (recognizing that e-mail may be authenticated by distinctive characteristics 901(b)(4), or by comparison of exemplars with other e-mails that already have been authenticated 901(b)(3)); </li></ul><ul><li>U.S. v. Siddiqui, 235 F.3d 1318 (e-mail may be authenticated entirely by circumstantial evidence, including its distinctive characteristics); </li></ul><ul><li>Rambus v. Infineon Tech, 348 F.Supp.2d 698 (EDVa 2004) (e-mail that qualifies as business record may be self-authenticating under 902(11)); and </li></ul><ul><li>In re F.P., 878 A.2d 91 (Pa. Super. 2005) (e-mail may be authenticated by direct or circumstantial evidence). </li></ul>
    35. 36. Thank You <ul><li>John J. Jablonski, Esq. </li></ul><ul><li>716.566.5469 </li></ul><ul><li>[email_address] </li></ul><ul><li>© COPYRIGHT 2008 Goldberg Segalla LLP </li></ul><ul><li>RIGHT OF REPRODUCTION GRANTED TO LORMAN / ALL RIGHTS RESERVED </li></ul>