E Discovery General E Discovery Presentation

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Overview of electronic discovery and obligations of outside counsel

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  • E Discovery General E Discovery Presentation

    1. 1. Electronic Discovery What You Need To Know Jason S. Vanacour Snell & Wilmer L.L.P.
    2. 2. E-Discovery Vocabulary <ul><li>Although there was an enormous amount of active data produced, the opposing party requested a forensic copy of all of the near-line, residual, and off-line data in their native format, including the slack space and the legacy data. </li></ul>
    3. 3. E-Discovery Vocabulary cont. <ul><li>Martin v. Northwestern Mut. Life Ins. Co. , 2006 WL 148991, 2006 U.S. Dist. LEXIS 2866 (M.D. Fla. Jan. 19, 2006) (sanctioning defendant and explaining that defendant’s “claim that he is so computer illiterate that he could not comply with production, is frankly ludicrous”). </li></ul>
    4. 4. Facts about Electronic Information <ul><li>People in North America alone transmit 4 trillion e-mails daily. </li></ul><ul><li>The average worker receives 20 to 80 e-mails daily. </li></ul><ul><li>93% of documents are created electronically. </li></ul><ul><li>Only 30% of documents are ever in hard copy format. </li></ul>
    5. 5. 2007 Cohasset Associates Electronic Records Management Survey <ul><li>40% of respondent organizations do not include electronic records in their retention schedules. </li></ul><ul><li>85% of respondent organizations did not include instant messaging in retention schedules. </li></ul><ul><li>39% of respondent organizations do not have formal policies for responding to litigation holds. </li></ul>
    6. 6. Cohasset Survey Cont. <ul><li>44% of the respondent organizations who said they had formal policies for responding to litigation holds said their policies did not address electronic records. </li></ul><ul><li>46% of respondent organizations said that they were not confident that if challenged in future litigation that their corporation could successfully demonstrate that its electronic records are accurate, reliable, and trustworthy. </li></ul>
    7. 7. Basic E-Discovery Rule <ul><ul><li>A party facing civil litigation, government investigation (regulatory, civil and/or criminal), prosecution or other such legal proceeding has an obligation to preserve evidence that may be relevant to that proceeding. </li></ul></ul><ul><ul><li>The duty to preserve relevant evidence applies not only to paper documents, but also to electronically stored information. </li></ul></ul>
    8. 8. Why is E-Discovery Different? <ul><li>METADATA </li></ul>
    9. 9. What is Metadata? <ul><li>Metadata is information about a particular data set which describes how, when and by whom it was collected, created, accessed or modified and how it was formatted (including data demographics such as size, location, storage requirements and media information). </li></ul>
    10. 10. Cost of Ignorance <ul><li>Qualcomm Inc. v. Broadcom Corp. , 2008 U.S. Dist. Lexis 911 (S.D. Cal. Jan. 7, 2008) </li></ul><ul><ul><li>Court sanctioned Qualcomm and its in-house and outside counsel for failing to produce more than 46,000 emails and documents requested in discovery. </li></ul></ul><ul><ul><li>Court ruled that outside counsel did not conduct a reasonable inquiry into the adequacy of Qualcomm’s electronic document search and production. </li></ul></ul><ul><ul><li>Court ordered Qualcomm to pay Broadcom $8,568,633 in sanctions, referred six attorneys to the State Bar of California for investigation of possible ethical violations, and ordered in-house and outside counsel to meet and develop a comprehensive a Case Review & Enforcement of Discovery Obligations protocol. </li></ul></ul>
    11. 11. Qualcomm Inc. v. Broadcom Corp. (cont.) <ul><li>“ [I]n 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 decide how best to locate, review, and produce responsive documents.” </li></ul><ul><li>Attorneys must ensure their clients conduct “a comprehensive and appropriate document search.” </li></ul>
    12. 12. Cost of Ignorance cont. <ul><li>Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., Inc. , 2005 WL 679071 (Fla. Cir. Ct. Mar. 1, 2005) </li></ul><ul><ul><li>After avowing to the Court that all electronic files had been searched, it was discovered that a large amount of backup tapes were not, in fact, reviewed. </li></ul></ul><ul><ul><li>The Court found Morgan Stanley’s actions to be deliberate and in bad faith. </li></ul></ul><ul><ul><li>The Court granted an adverse jury instruction which allowed the jury to assume that Morgan Stanley committed fraud. </li></ul></ul><ul><ul><li>Plaintiff awarded $1.4 Billion in damages by the jury. </li></ul></ul>
    13. 13. Managing E-Discovery <ul><li>Prior to Notice of Possible Litigation or Claim </li></ul><ul><li>Notice of Possible Litigation or Claim </li></ul><ul><li>Commencement of Litigation </li></ul>
    14. 14. Managing E-Discovery Stages of Business Stage 1 Prior to Notice of Claim (day-to-day operations) Stage 2 Notice of Possible Litigation or Claim (litigation hold issued) Stage 3 Commencement of Litigation (rules of civil procedure)
    15. 15. Stage 1: Prior to Notice <ul><li>It is the responsibility of every business to have a “reasonable” document retention policy. </li></ul><ul><li>Rule 37 (Safe Harbor implications) </li></ul>
    16. 16. What is Reasonable? <ul><li>Lewy v. Remington Arms Co . , 836 F.2d 1104, 1988 U.S. App. LEXIS 83, (8th Cir. 1988). </li></ul><ul><ul><li>In a product liability action brought against a rifle manufacturer, defendant appealed, among other issues, whether a manufacturer's inability to produce certain documents that had been destroyed under its record retention policy warranted submission of a general negative inference instruction to the jury. Remington argued that destroying records pursuant to routine procedures should not result in an inference adverse to the party that destroyed the documents. The Court could not determine the issue on the record and remanded the question, instructing the lower Court to determine whether Remington's records retention policy was reasonable considering the circumstances surrounding the relevant documents. </li></ul></ul>
    17. 17. Lewy v. Remington Arms <ul><li>whether defendant's policy was reasonable considering the facts and circumstances surrounding the relevant documents (e.g., a three-year retention period may be sufficient for standard documents such as appointment notes or telephone messages, but may not be sufficient for records of customer complaints); </li></ul>
    18. 18. Lewy v. Remington Arms <ul><li>2. whether lawsuits concerning the complaints or related complaints had been filed, the frequency of such complaints, and the magnitude of the complaints; and </li></ul>
    19. 19. Lewy v. Remington Arms <ul><li>3. whether the document retention policy was instituted in “bad faith.” If the corporation knew or should have known that the documents would become material at some point in the future, then such documents should have been preserved. </li></ul>
    20. 20. Stage 2: Notice of Possible Claim <ul><li>What constitutes notice? </li></ul><ul><li>What action must be taken if you have notice of possible claim? </li></ul>
    21. 21. A. Notice <ul><li>Actual or reasonably anticipated litigation, governmental investigation or audit; preservation orders issued in active litigation; and certain business related scenarios (e.g., mergers, acquisitions or bankruptcy). </li></ul>
    22. 22. Notice cont. <ul><li>That is, there must be some set of facts and circumstances that would lead to a conclusion that litigation is imminent or should otherwise be expected. </li></ul><ul><li>The mere fact that litigation regarding a topic is generally a possibility is ordinarily not enough to trigger preservation orders. </li></ul>
    23. 23. Examples of Notice <ul><li>Zubulake v. UBS Warburg LLC , 220 F.R.D. 212 (S.D.N.Y. 2003). In a employment discrimination case, duty to preserve attached as soon as plaintiff’s supervisors became reasonably aware of the possibility of litigation, rather than when EEOC complaint was filed several months later. </li></ul><ul><li>Rambus, Inc. v. Infineon Techs. AG , 220 F.R.D. 264 (E.D. Va. 2004). Where plaintiff knew it was likely to bring litigation, it could not create program with intent to destroy relevant evidence. </li></ul>
    24. 24. B. What Duty Arises? <ul><li>Duty to preserve potential evidence. </li></ul><ul><li>Suspend the normal course of records destruction, including the normal procedures for disposing of electronic information and records. </li></ul>
    25. 25. Fulfilling Duty <ul><li>How do you comply with the duty once it is triggered? </li></ul><ul><ul><li>Issue a preservation order (litigation hold): a communication issued as a result of current or anticipated litigation that suspends the normal disposition of processing records. This communication may also be known as a “legal hold,” “suspension order,” “freeze notice,” or “hold order.” </li></ul></ul>
    26. 26. Preservation Orders (Litigation Hold) <ul><li>A company’s document retention policy should provide specific information concerning preservation orders such as the following: </li></ul><ul><ul><li>Who has authority to issue a preservation order? </li></ul></ul><ul><ul><li>Who is responsible for communicating the legal preservation order requirements? </li></ul></ul><ul><ul><li>Who is responsible for implementation? </li></ul></ul><ul><ul><li>Who has authority to determine that the need for a preservation order no longer exists? </li></ul></ul>
    27. 27. Counsel’s Duty to Oversee Preservation <ul><li>Zubulake v. USB Warburg, LLC , 2004 U.S. Dist. LEXIS 13574 (S.D.N.Y. 2004) “While, of course, it is true that counsel need not supervise every step of the document production process and may rely on their clients in some respects, counsel is responsible for coordinating her client's discovery efforts.” </li></ul>
    28. 28. Counsel’s Duty Cont. <ul><li>Outside counsel: </li></ul><ul><li>Must issue preservation order (litigation hold); </li></ul><ul><li>Interview and instruct all the key players in the litigation; and </li></ul><ul><li>Instruct all employees to produce electronic copies of their relevant active files, and make sure all backup material that may be relevant is marked and stored. </li></ul><ul><li>See Zubulake v. USB Warburg, LLC , 2004 U.S. Dist. LEXIS 13574, *39-*40 (S.D.N.Y. 2004). </li></ul>
    29. 29. Counsel’s Duty cont. <ul><li>Specifically, “counsel must become familiar with her client’s document retention policies, as well as the client’s data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and the actual (as opposed to theoretical) implementation of the firm’s recycling policy. It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information.” Zubulake at *33. </li></ul>
    30. 30. Stage 3: Commencement of Litigation <ul><li>Discovery </li></ul><ul><ul><li>What do you want from the opposing party and how do you get it? </li></ul></ul><ul><li>Evidential Integrity </li></ul><ul><ul><li>How do I get the evidence I want admitted? </li></ul></ul>
    31. 31. Discovery <ul><li>Narrowly tailor discovery requests. </li></ul><ul><li>In re. Honeywell Int’l, Inc. Securities Litigation , 2003 U.S. Dist. LEXIS 20602 (S.D.N.Y. Nov. 18, 2003). Plaintiffs moved to compel production of all email and other electronic documents in PWC’s possession that were created during a two year period and related in any way to Honeywell. The Court determined the request, as framed, was overly broad. The Court indicated that plaintiffs’ request should have provided some reasonable limitation by subject matter or individual. </li></ul><ul><li>Cache Poudre Feeds, LLC v. Land O’Lakes, Inc ., 2007 U.S. Dist. LEXIS 15277 (Dist. Co. March 2, 2007). The court refused to impose sanctions based on certain discovery failures because “the court is loath to impose sanctions that might be misconstrued as a tacit endorsement of poorly drafted discovery requests.” </li></ul>
    32. 32. Discovery cont. <ul><li>The opposing party has a right to the information in its native format. </li></ul><ul><li>Zhou v. Pittsburg State Univ ., 2003 U.S. Dist. LEXIS 6398 (D. Kan. 2003). Court ordered defendant to produce computer-generated documents, even after information was already compiled by hand and submitted in typewritten form. </li></ul>
    33. 33. Evidentiary Integrity <ul><li>Must be able to prove that the evidence is authentic to be admissible. </li></ul><ul><li>Maintaining evidentiary integrity is critical in any electronic data-gathering project. It is important to never work with the original evidence. </li></ul>
    34. 34. E-Discovery Concepts <ul><li>Metadata: application v. system </li></ul><ul><li>Litigation Hold: preservation v. production </li></ul><ul><li>Costs: splitting v. shifting </li></ul><ul><li>Discovery: 1st tier v. 2nd tier </li></ul><ul><ul><li>accessible v. not reasonably accessible </li></ul></ul>
    35. 35. AMENDED FEDERAL RULES <ul><li>Rule 16(b) </li></ul><ul><li>Rule 26 (a)(1)(B), (b)(2)(B), (b)(5)(B), (f) </li></ul><ul><li>Rule 33(d) </li></ul><ul><li>Rule 34(a), (b) </li></ul><ul><li>Rule 37 </li></ul><ul><li>Rule 45 </li></ul>
    36. 36. FEDERAL RULE 16(b) <ul><li>Current Rule – early in the case, court should enter a scheduling order, governing discovery </li></ul><ul><li>Amended Rule – adds language indicating that scheduling orders may include: </li></ul><ul><ul><li>“ provisions for disclosure or discovery of electronically stored information and form of production” </li></ul></ul><ul><ul><li>“ any agreements the parties reach for asserting claims of privilege . . . after production ” </li></ul></ul>
    37. 37. FEDERAL RULE 26(f) <ul><li>Current Rule – requires parties to meet and confer as soon as practicable regarding, in part, a discovery plan </li></ul><ul><li>Amended Rule – adds items to the parties’ meet and confer session </li></ul><ul><ul><li>Preservation of discoverable information </li></ul></ul><ul><li>Adds topics for discovery plan </li></ul><ul><ul><li>Discovery of ESI and form of production </li></ul></ul><ul><ul><li>Asserting privilege after production </li></ul></ul>
    38. 38. RULE 26(a)(1)(B) <ul><li>Current Rule – requires each party to disclose description and location of all documents and things in possession which may be used to support claim or defense </li></ul><ul><li>Amended Rule – adds category of ESI to the list of items which must be disclosed by description and location; removes term “data compilations” </li></ul>
    39. 39. RULE 26(b)(2)(B) <ul><li>“Not reasonably accessible” exception </li></ul><ul><li>Need not produce if undue burden or cost Responder burden , but no standard in rule </li></ul><ul><ul><li>Difficult or impossible to locate; </li></ul></ul><ul><ul><li>Obsolete and unreadable file formats; </li></ul></ul><ul><ul><li>Significant expense to make readable/usable; </li></ul></ul><ul><ul><li>Cannot capture without altering; </li></ul></ul><ul><ul><li>Incredibly voluminous; or </li></ul></ul><ul><ul><li>Riddled with privileged information </li></ul></ul>
    40. 40. RULE 26(b)(2)(B) (cont.) <ul><li>Responding party designates information as “not reasonably accessible” </li></ul><ul><li>Requesting party files motion to compel </li></ul><ul><li>Responding party’s burden to prove undue burden or cost – No Balancing </li></ul><ul><li>Burden shifts to requesting party - “good cause” for discovery considering Rule 26(b)(2)(C) </li></ul><ul><ul><li>Cumulative or duplicative </li></ul></ul><ul><ul><li>Requester has had ample opportunity for discovery </li></ul></ul><ul><ul><li>Burden or expense outweighs benefit - Balancing </li></ul></ul><ul><li>Court may employ cost-shifting </li></ul>
    41. 41. RULE 26(b)(2)(B) Compared to Zubulake <ul><li>Zubulake </li></ul><ul><ul><li>Presumption generally that all ESI is discoverable </li></ul></ul><ul><ul><li>Seven-factor analysis to determine who bears the cost of production </li></ul></ul><ul><ul><li>Responder must show burden/cost outweighs benefit </li></ul></ul><ul><li>Amended Rule </li></ul><ul><ul><li>Distinction between “accessible” and “not reasonably accessible” </li></ul></ul><ul><ul><li>Presumption - information that is “not reasonably accessible” is not discoverable </li></ul></ul><ul><ul><li>Requester must demonstrate “good cause” </li></ul></ul>
    42. 42. PRIVILEGE ISSUES <ul><li>Rule 26(b)(5)(B) – Claw Back Provision </li></ul><ul><ul><li>Premised on greater chance of inadvertent disclosure of privileged information with ESI, particularly metadata </li></ul></ul><ul><ul><li>Previously 3 general approaches </li></ul></ul><ul><ul><ul><li>Strict accountability - almost always waiver </li></ul></ul></ul><ul><ul><ul><li>Lenient – rare waiver unless intentional disclosure </li></ul></ul></ul><ul><ul><ul><li>Balancing test – case by case analysis of conduct which led to disclosure </li></ul></ul></ul><ul><ul><li>Amended rule provides for initial protection of material </li></ul></ul><ul><ul><ul><li>But not substantive privilege law </li></ul></ul></ul><ul><ul><li>Not limited to ESI </li></ul></ul>
    43. 43. PRIVILEGE ISSUES (cont.) <ul><li>Rule 26(b)(5)(B) does not establish test for analyzing wavier issues – left to local substantive law </li></ul><ul><li>Rule establishes procedure to limit disclosure until issue is resolved </li></ul><ul><ul><li>Receiving party must promptly retrieve and “return, sequester, or destroy the information” </li></ul></ul><ul><ul><li>Receiving party may promptly present to the court </li></ul></ul><ul><ul><li>Receiving party may not use the information until privilege and waiver issues resolved </li></ul></ul><ul><ul><li>Producing party must preserve until privilege resolved </li></ul></ul>
    44. 44. PRIVILEGE ISSUES (cont.) <ul><li>Quick Peak </li></ul><ul><ul><li>Permits opposing party to view material in advance of asserting/establishing privilege </li></ul></ul><ul><ul><li>Opposing party identifies relevant material </li></ul></ul><ul><ul><li>Producing party designates privileged info </li></ul></ul><ul><li>Designed to facilitate expeditious determination of privileged information with respect to voluminous material </li></ul><ul><ul><li>Clear disclosure downsides </li></ul></ul>
    45. 45. Evidentiary Privilege <ul><li>Amendment to Rule 502, Fed.R.Evid. </li></ul><ul><ul><li>The main focus of amendment is inadvertent disclosure </li></ul></ul><ul><ul><li>Takes the middle ground </li></ul></ul><ul><ul><ul><li>Inadvertent disclosure does not waive the privilege if the party took reasonable precautions to prevent disclosure and took reasonable and prompt efforts to rectify the error. </li></ul></ul></ul><ul><ul><li>Get a Court Order </li></ul></ul><ul><ul><ul><li>“ A federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court-in which event the disclosure is also not a waiver in any other federal or state proceeding.” </li></ul></ul></ul>
    46. 46. RULE 33(d) <ul><li>Current rule – may produce business records in lieu of specific response </li></ul><ul><li>Amended rule – same procedure for ESI </li></ul><ul><ul><li>Producing party, however, may be obligated to provide technical support - requirement to provide sufficient detail to permit receiving party to locate and identify records from which the answer may be ascertained </li></ul></ul><ul><ul><li>“Reasonable opportunity to examine, audit, or inspect” </li></ul></ul>
    47. 47. RULE 34 (a) <ul><li>Current Rule – generally permits “inspection or copying” </li></ul><ul><li>Amended Rule – provides requesting party right to “test or sample” electronic systems </li></ul><ul><ul><li>Designed to relieve need for overly broad requests, multiple discovery rounds, and 30(b)(6) depositions due to complexity of ESI </li></ul></ul><ul><ul><li>“Not meant to create a routine right of direct access to a party’s electronic information” </li></ul></ul>
    48. 48. Rule 34(b) – FORM OF PRODUCTION <ul><li>Requester may specify </li></ul><ul><ul><li>Subject to objection based on reasonableness </li></ul></ul><ul><li>If objection or no form specified, responder must indicate intended form of production </li></ul><ul><li>Required forms of production if no form specified </li></ul><ul><ul><li>Native – as maintained in normal course of business </li></ul></ul><ul><ul><li>Reasonably usable – Readable? Workable? </li></ul></ul><ul><li>“ A party need not produce the same electronically stored information in more than one form” </li></ul>
    49. 49. RULE 37(f) – SAFE HARBOR <ul><li>Amended Rule – “ Absent exceptional circumstances , a court may not impose sanctions under these rules on a party for failing to provide electronically-stored information lost as the result of the routine, good-faith operation of an electronic information system .” </li></ul>
    50. 50. RULE 45 - SUBPOENAS <ul><li>Amended Rule </li></ul><ul><ul><li>Adds “testing, or sampling” language </li></ul></ul><ul><ul><li>If subpoena does not specify form of production for ESI, responder must provide native or reasonably usable format </li></ul></ul><ul><ul><li>Need not provide ESI in multiple forms </li></ul></ul><ul><ul><li>Incorporates Rule 26(b)(2)(B) </li></ul></ul><ul><ul><li>“not reasonably accessible analysis” </li></ul></ul><ul><ul><li>Incorporates Rule 26(b)(5) claw back process </li></ul></ul>
    51. 51. Practice Points <ul><li>Make sure corporation has “reasonable” document retention policy and that it is followed. It should include specific guidelines for issuing a preservation order. </li></ul><ul><li>Issue preservation order upon notice of claim. </li></ul><ul><li>Communicate preservation order to all key employees and IT department. </li></ul>
    52. 52. Practice Points cont. <ul><li>Interview all the key players to understand how they store information and what information may be out there. </li></ul><ul><li>Explain to key players their duty to search certain media and types of documents. Do not expect a written order to be enough. </li></ul><ul><li>Oversee and direct gathering of electronic data. Coordinate with the client and develop discovery plan. </li></ul>

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