Edited by Brad Harris and Ron HedgesPerspectives on Lowering the Burden ofPreserving Data in Civil LitigationNovember 2011...
ABOUT BRAD HARRISVICE PRESIDENT OF LEGAL PRODUCTS, ZAPPROVED INC.Brad Harris has more than 25 years of experience in the h...
Preservation and Proportionality | 1© 2011 by Zapproved Inc. and Ronald J. HedgesPreservation and ProportionalityPerspecti...
2 | Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesPreservation and ProportionalityPerspecti...
Preservation and Proportionality | 3© 2011 by Zapproved Inc. and Ronald J. Hedgessheer volume of data will continue to dri...
4 | Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesprocess of creating and managing redundan...
Preservation and Proportionality | 5© 2011 by Zapproved Inc. and Ronald J. Hedges‘Proportionality’ Under the Federal Rules...
6| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesobtained from some other source that ismor...
Preservation and Proportionality | 7© 2011 by Zapproved Inc. and Ronald J. Hedges2011 Case LawProportionality, Preservatio...
8| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesPippins v. KPMG Focuses on Proportionality...
Preservation and Proportionality | 9© 2011 by Zapproved Inc. and Ronald J. HedgesPerspectives onPreservation and Proportio...
10| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesProportionality Shouldn’t Reward Incompet...
Preservation and Proportionality | 11© 2011 by Zapproved Inc. and Ronald J. Hedgespreservation seen. “Keep it if it might ...
12| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesEffective Education Will Lead to Proporti...
Preservation and Proportionality | 13© 2011 by Zapproved Inc. and Ronald J. Hedgesfor real and meaningful discussion of re...
14| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesinformation organizing architecture, a te...
Preservation and Proportionality | 15© 2011 by Zapproved Inc. and Ronald J. Hedgesreasonable places to draw the lines, whi...
16| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesCooperation and Information Standardizati...
Preservation and Proportionality | 17© 2011 by Zapproved Inc. and Ronald J. HedgesProportionality Isn’t the Challenge, Ope...
18| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesfor a spoliation motion. Yet in practice,...
Preservation and Proportionality | 19© 2011 by Zapproved Inc. and Ronald J. HedgesRaising the Bar on Proportionality?By Jo...
20| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesthe equivalent of 243,072 banker boxes co...
Preservation and Proportionality | 21© 2011 by Zapproved Inc. and Ronald J. HedgesSome Observations Regarding Preservation...
22| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesIn Shaping Proportionality, Bright Lines ...
Preservation and Proportionality | 23© 2011 by Zapproved Inc. and Ronald J. Hedgesparty to show cause to go beyond such li...
24| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesheld by opposing sides in a litigation te...
Preservation and Proportionality | 25© 2011 by Zapproved Inc. and Ronald J. HedgesPippins v. KPMG Highlights the Need for ...
26| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesguidance that codifies the general princi...
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation
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Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation

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The spotlight has turned to the issue of proportionality as it may be applied to the preservation of potentially relevant information. The postPension Committee world has moved beyond asking “if” litigants need to preserve information to a focus on “how.”

One need look no further than the testimony before the Dallas mini-conference in September and followed shortly thereafter by the debate stirred by the Pippins v. KPMG opinion.

Litigants are struggling to balance the increasing demands of preservation being driven by the exponential increase in electronically stored information (ESI) and the perceived rise in sanctions for spoliation. In order to control the increasing cost and “monumental inefficiency” that can result from traditional approaches to data preservation, the stakeholders in the U.S. legal system are searching for a solution founded on the principles of both reasonableness and proportionality as embodied in the Federal Rules of Civil Procedure.

The goal of this paper is to explore options for providing more objective “guideposts” for litigants facing the uncertainty of future discovery demands.

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Preservation and Proportionality: Lowering the Burden of Preserving Data in Civil Litigation

  1. 1. Edited by Brad Harris and Ron HedgesPerspectives on Lowering the Burden ofPreserving Data in Civil LitigationNovember 2011Preservation andProportionality
  2. 2. ABOUT BRAD HARRISVICE PRESIDENT OF LEGAL PRODUCTS, ZAPPROVED INC.Brad Harris has more than 25 years of experience in the high technology and enterprisesoftware sectors, including assisting Fortune 1000 companies enhance their e-discoverypreparedness through technology and process improvement. Brad is a frequent author andspeaker on data preservation and e-discovery issues, including articles in the National LawJournal, Corporate Counsel, Metropolitan Corporate Counsel and Information Managementand presentations at leading industry events such as LegalTech New York. Prior to joiningZapproved, he led the development of electronic discovery readiness consulting efforts forFios, Inc. from 2004 to 2009. He has held senior management positions at prominent publicand privately held companies, including Hewlett-Packard, Tektronix and Merant.ABOUT RONALD J. HEDGESFORMER UNITED STATES MAGISTRATE JUDGEJudge Ronald J. Hedges is the principal in Ronald J. Hedges, LLC. He has extensive experience ine-discovery and in management of complex civil litigation matters. Mr. Hedges was appointedin 1986 as a United States Magistrate Judge in the United States District Court for the Districtof New Jersey, where he served as the Compliance Judge for the Court Mediation Program, amember of the Lawyers Advisory Committee, and both a member and reporter for the CivilJustice Reform Act Advisory Committee. From 2001 to 2005 he was a member of the AdvisoryGroup of Magistrate Judges. Mr. Hedges has also been an adjunct professor at Seton HallUniversity School of Law (1993-2007) and at Georgetown University Law Center since 2006.Ron Hedges has not been compensated for contributing to this article, is not affiliatedwith Zapproved, Inc. and offers no endorsement of its products or services.DISCLAIMERThis Signature Paper is provided for general information and educational purposes only. The contents should notbe construed as legal advice or opinion. While every effort has been made to be accurate, the contents should notbe relied upon in any specific factual situation. This Signature Paper is not intended to provide legal advice or tocover all laws or regulations that may be applicable to a specific factual situation. If you have matters to beresolved or for which legal advice may be indicated, you are encouraged to contact a lawyer authorized to practicelaw in your jurisdiction.ABOUT ZAPPROVED INC.Zapproved is a Software-as-a-Service (SaaS) provider based in Portland, Ore., witha platform that adds accountability to business communications. Zapproved’s firstproducts focus on targeted compliance workflows that reduce liability risk in legaland regulatory compliance. The company is expanding its product line to create asuite of applications that address additional compliance issues and workplace collaboration.© 2011 by Zapproved Inc. and Ronald J. Hedges. All rights reserved.Zapproved Inc.Zapproved Inc.19075 NW Tanasbourne, Suite 120, Hillsboro, OR 97124 USATel: (888) 376-0666 Email: info@legalholdpro.com Website: www.legalholdpro.com
  3. 3. Preservation and Proportionality | 1© 2011 by Zapproved Inc. and Ronald J. HedgesPreservation and ProportionalityPerspectives on Lowering the Burden ofPreserving Data in Civil LitigationEdited by Brad Harris and Ron HedgesTable of ContentsIntroduction....................................................................................................................................2‘Proportionality’ Under the Federal Rules: An Overview...............................................................52011 Case Law: Preservation, Proportionality and Spoliation.......................................................7Pippins v. KPMG Focuses on Proportionality..................................................................................8Perspectives on Preservation and Proportionality.........................................................................9Craig Ball: Proportionality Shouldn’t Reward Incompetence...................................................10Kevin Brady: Effective Education Will Lead to Proportionality................................................12Eugenia Brumm: Improved Records Management Reduces ESI for aMore Proportional Response...........................................................................................13David Cohen: Rule 1 Should Guide Us .....................................................................................14Dr. Richard Esham: Cooperation and Information Standardization in HealthcareCan Show a Path to Proportionality ................................................................................16Maura Grossman: Proportionality Isn’t the Challenge, Operationalizing It Is.........................17John Jablonski: Raising the Bar on Proportionality?................................................................19Tom Kelly: Some Observations Regarding Preservation and Proportionality .........................21Browning Marean: In Shaping Proportionality, Bright Lines May Not Be the Answer............22Ariana Tadler: The Advantage of Transparency in Determining Preservation Efforts ............23Jeane Thomas: Pippins v. KPMG Highlights the Need for Proportionality andReasonableness Standards..............................................................................................25David Walton: Manage ESI Dangers with Targeted Collections..............................................26Paul Weiner: It’s Time to Clarify via Amended Rules that ProportionalityMust Apply to Preservation.............................................................................................28Appendix: U.S. Chamber Amicus Brief for Pippins v. KPMG (Nov. 4, 2011) ................................32
  4. 4. 2 | Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesPreservation and ProportionalityPerspectives on Lowering the Burden ofPreserving Data in Civil LitigationIntroductionBy Brad Harris and Ron Hedgeshe spotlight has turned tothe issue of proportionalityas it may be applied to thepreservation of potentiallyrelevant information. The post-Pension Committee world hasmoved beyond asking “if” litigantsneed to preserve information to afocus on “how.”One need look no further thanthe testimony before the Dallas mini-conference inSeptember and followed shortly thereafter by thedebate stirred by the Pippins v. KPMG1opinion.Litigants are struggling to balance the increasingdemands of preservation being driven by theexponential increase in electronically storedinformation (ESI) and the perceived rise in sanctionsfor spoliation.In order to control the increasing cost and“monumental inefficiency”2that can result fromtraditional approaches to data preservation, thestakeholders in the U.S. legal system are searchingfor a solution founded on the principles of both1Pippins v. KPMG LLP, No. 11 Civ. 0377 (CM)(JLC), 2011WL 4701849 (S.D.N.Y. Oct. 7, 2011).2Minutes of the Mini-Conference on Preservation andSanctions, Dallas, Texas, September 9, 2011.reasonableness andproportionality as embodied inthe Federal Rules of CivilProcedure.The goal of this paper is toexplore options for providingmore objective “guideposts” forlitigants facing the uncertainty offuture discovery demands.THREE COST DRIVERS FOR PRESERVATIONIt is clear that the cost of discovery andspecifically the cost of preservation continue toescalate. The drivers of this cost can be attributed toat least three key factors as described below.The increasing amount and complexity of ESIAs the cost of electronic storage continues toplummet, the amount of ESI we can retain continuesto rise exponentially. Where we retain informationis also becoming far more diverse, moving forexample from our traditional computer hard drivesand corporate servers, to mobile devices and cloud-based storage. How we create information is alsoconstantly evolving, including communicationmediums and how we interact with one another.With such technology innovation, the opportunity tocreate and retain an ever-increasing diversity andT
  5. 5. Preservation and Proportionality | 3© 2011 by Zapproved Inc. and Ronald J. Hedgessheer volume of data will continue to driveunprecedented challenges when we are faced with aduty to preserve.The threat of sanction motions becoming all toorealAs litigants become more ESI-savvy and theproliferation of “potentially relevant” data sourcesgrow, the threat of sanction motions will alsocontinue to escalate. Effort taken to appropriatelyidentify and react to a preservation obligation willundoubtedly be scrutinized, and missteps will beused against a litigant irrespective of the true meritsof a case. Courts are also losing patience when theyperceive that ostensibly reasonable actions, such asimplementing an effective legal hold notificationprocess or suspending auto-deletion programs, arefound lacking and data lost.Once started, it’s hard to stopThe cost and burden of preservation isexacerbated because, once started, it is oftendifficult to stop preserving data and return to normalretention practices. The threat of “preservingeverything forever” becoming business-as-usual is alltoo real, especially when dealing with multiple andoverlapping legal holds coupled with poorly-definedor uncertain scope.The impact of overly-broad preservation iscompounded when data is collected and multiplecopies retained.. When preservation becomesreliant on journaling every email, imaging every harddrive and pulling every back-up tape, the likelihoodof knowing what can be deleted later on becomesinfinitesimally small.THE SEARCH FOR RATIONALITY FOR LITIGANTSOrganizations are struggling with how to reducecosts without incurring undue risk. What steps arereasonable when faced with a duty to preserveinformation for discovery? Should the principles ofproportionality apply to good faith efforts topreserve ESI?Although opinions vary, there were four keyconclusions that can be drawn from the contributingauthors.Amendments to the rules of civil procedure may ormay not be the answerThere have been calls for amendments to theFederal Rules of Civil Procedure to provide greaterclarity and consistency with regards to a litigant’spreservation obligations. Proposed changes wouldseek to provide greater certainty with regards towhen a triggering event occurs, how to define andlimit the scope of preservation, and when the dutycan be lifted. They would seek greater consistencyamong jurisdictions, especially when consideringhow and when sanctions should be applied by thecourts. And they would clearly articulate that theprinciples of proportionality upon which the FederalRules are predicated (Rule 1) should apply equally tothe duty to preserve.Despite the call for greater “guideposts” when itcomes to preservation, there is also recognition thatrule changes may not be the answer. It can beextremely challenging to apply “bright lines” in everycase (such as defining what constitutes a triggeringevent or limiting the scope of preservation,especially when addressing pre-litigationobligations). Some fear the inevitable unintendedconsequences that such lines may yield. Othersquestion if rule changes are necessary given that theRules already embody the principle ofproportionality in both Rule 1 and Rule 26(b)(2)(C).Rule changes take a long time to address andchanges might become obsolete due to the rapidevolution of technology.Litigants must seek ways to minimize the cost andrisk of preservationIntelligent preservation strategies should seekways to reasonably limit the cost and burden ofpreservation and subsequent discovery costs. Thescope of preservation, either initially or over the lifeof a hold, can be limited by subject matter, thenumber and types of data sources, the types ofinformation and how it is stored, and the timeframeover which the preservation duty applies.Organizations must challenge traditional tacticsfor preservation. Gone are the days of the“scorched earth” response that sought to copy everybit and byte of data, or retain every back-up tapethat might apply. Such tactics can quickly becomeradically expensive and burdensome, andincreasingly impossible to achieve as “potentiallyrelevant” data can exist in so many places. The
  6. 6. 4 | Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesprocess of creating and managing redundant copiesof data for preservation incurs not only direct costs,but indirect costs for later culling and review (andcan become subject to unrelated holds). And asstated earlier, once such preservation is started, it’shard to get rid of the stuff and return to normalretention practices.When considering ways to limit the cost ofpreservation, it is critical to consider such tactics inthe context of the total cost of discovery. The cost topreserve information is always far less than the costto collect, review and produce the data (therefore, astrategy of broader preservation is generally sound).Actions should be balanced against the risk ofsanctions and other court-imposed remedial actions(e.g., the cost of preserving too few sources). AndCounsel should to their homework and documenttheir decisions regarding reasonableness, good faithand proportionality.If you haven’t done so already, get to know yourdataIt is vital that litigants to get to know their data.Attorneys should be asking questions about howdata is created and retained. They should seek theknowledge of experts within an organization. Theyshould create and assemble their ready-action teams(aka litigation hold committees or discoveryresponse teams) and call upon them whendeveloping a preservation response plan. And theyshould capture knowledge gained, whetherproactively in the form of “data mapping” or inresponse to each duty to preserve data.Organizations should also seek the guidance andexpertise of records management professionals andapply sound information governance principles tothe extent possible. Done well, informationgovernance can help control the proliferation ofunnecessary or unwanted data that represents novalue to the organization. With less data retained,the cost and burden of preservation is equallyreduced. At a minimum, such informationgovernance initiatives can help the organization tobetter understand its data, including what, whereand why ESI is being created and retained. Suchknowledge is invaluable when defining andarticulating a scope of preservation.Counsel should demand and defend proportionalityat every stepThroughout all of the contributed essays is acommon theme – attorneys must strive for anddefend proportionality decisions wheneverresponding to a duty to preserve. Proportionality isa core tenet of achieving the “just, speedy andinexpensive” resolution of issues.Effectively applying proportionality demandsconsistency, collaboration, and, in some instances, acourt order. A well-reasoned and understoodprocess that is consistently applied is always theeasiest strategy to defend. By establishing a dialoguewith opponents regarding preservation strategies,litigants may facilitate collaboration or, at the veryleast, create a stronger negotiating position. Andthey shouldn’t be hesitant to seek protective orderswhen agreement cannot be reached andpreservation decisions become subject to laterchallenge.The fact is this debate is far from settled. Thispaper should prove enlightening and help shape thediscussion by representing a variety of viewpoints.We would like to sincerely thank all those whocontributed their time and brainpower to thisstimulating project.
  7. 7. Preservation and Proportionality | 5© 2011 by Zapproved Inc. and Ronald J. Hedges‘Proportionality’ Under the Federal Rules: An OverviewBy Ron HedgesThe concept of proportionality underlies theFederal Rules of Civil Procedure (“Rules”).Proportionality may be explicit in some of the Rules,but is implied throughout. Proportionality addresseslitigation conduct, including making and respondingto discovery requests, ethical behavior, and theaward of sanctions.Rule 1Rule 1 provides that the Rules “should beconstrued and administered to secure the just,speedy, and inexpensive determination of everyaction and proceeding.” The words, “andadministered,” were added in 1993. The revision wasintended to, “recognize the affirmative duty of thecourt to exercise the authority conferred by theserules to ensure that civil litigation is resolved notonly fairly, but also without undue cost or delay.As officers of the court, attorneys share thisresponsibility with the judge to whom the case isassigned.” Advisory Committee Note to 1993Amendment to Rule 1 (emphasis added). Rule 1 thusimposes an obligation on the Bench and the Bar totake affirmative steps to resolve litigation in a“proportional” manner, taking into considerationfairness and costs.Rule 26(b)(1)This Rule establishes the scope of discovery infederal civil litigation. In a sense, it bifurcatesdiscovery. First, “*p+arties may obtain discoveryregarding any nonprivileged matter that is relevantto any party’s claim or defense.” Second, for goodcause shown, “the court may order discovery of anymatter relevant to the subject matter involved in theaction.”That bifurcation is an invitation to courts andattorneys to strive for proportionality in discovery bylimiting the subjects of discovery. However, undereither standard, Rule 26(b)(1) explicitly recognizesproportionality: “All discovery is subject to thelimitations imposed by Rule 26(b)(2)(C).” Rule26(b)(2)(C) is the “proportionality rule.”Rule 26(b)(2)(B)This Rule, adopted as part of the electronicdiscovery amendments in 2006, again makes explicitreference to the proportionality rule. Rule26(b)(2)(B), building on the Zubulake decisions,established the concept of ”not reasonablyaccessible” sources of electronically storedinformation or “ESI.” In the first instance, discoverymay not be had from sources of ESI that are notreasonably accessible “because of undue burden orcost.” However, assuming that undue burden or costis shown, “the court may nevertheless orderdiscovery from such sources if the requesting partyshows good cause, considering the limitations ofRule 26(b)(2)(C). The court may specify conditions forthe discovery.” (emphasis added).Again, proportionality operates on several levelsin this Rule. First, considerations of cost and delaymake certain sources of ESI presumptively notsubject to discovery, thus conserving partyresources. Second, if a court finds good cause toallow discovery from such sources, the court looks tothe proportionality rule to determine what discoveryshould be had and under what conditions.Rule 26(b)(2)(C)This is the proportionality rule. Unfortunately, ashas been observed on more than one occasion, itmay be the most underutilized of the Rules: “TheCommittee has been told repeatedly that courtshave not implemented these limitations with thevigor that was contemplated.” GAP Report to 2000Amendment to Rule 26(b)(1). Presumably, as theBench and the Bar confronts issues of, among otherthings, the volume and complexity of electronicdiscovery, the Rule will be featured more often inarguments and rulings.Rule 26(b)(2)(C) provides that, on a party’smotion or on its own initiative, “the court must limitthe frequency or extent of discovery otherwiseallowed by these rules or by local rule if itdetermines” that one or more of three conditionsare met. These conditions are: “the discovery sought is unreasonablycumulative or duplicative, or can be
  8. 8. 6| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesobtained from some other source that ismore convenient, less burdensome, or lessexpensive.” Rule 26(b)(2)(C)(i). “the party seeking discovery has had ampleopportunity to obtain the information bydiscovery in the action.” Rule 26(b)(2)(C)(ii). “the burden or expense of the proposeddiscovery outweighs its likely benefit,considering the needs of the case, theamount in controversy, the party’sresources, the importance of the issues atstake in the action, and the importance ofthe discovery in resolving the issues.” Rule26(b)(2)(C)(iii).Each of these conditions calls for some analysisof proportionality.Rule 26(c)Rule 26(c) addresses protective orders. Again, ina sense, it addresses proportionality at severallevels. First, the Rule provides that no motion maybe made unless the moving party certifies that it has“in good faith conferred or attempted to confer withother affected parties to resolve the dispute withoutcourt action.” Rule 26(c) thus attempts to conservethe resources of the parties and the courts andfurther the goals of Rule 1.Assuming a motion is made, Rule 26(c) providesthat, “*t+he court may, for good cause, issue an orderto protect a party or person from annoyance,embarrassment, oppression, or undue burden orexpense.” Among other things, Rule 26(c) ordersmay, for example, bar Rule 26(a)(1) disclosures ordiscovery, specify the time and place of discovery,and forbid discovery into certain matters. Rule 26(c)thus affords considerable discretion to judges to, ineffect, impose proportionality on parties.Rule 26(g)Rule 26(g) is the discovery counterpart of Rule11, both of which address the effect of attorneys’signatures. Rule 26(g)(1) provides that everydisclosure, “and every discovery request, response,or objection must be signed by at least one attorneyof record… .” Moreover, “*b+y signing, an attorney …certifies that to the best of the person’s knowledge,information, and belief formed after a reasonableinquiry” certain implied representations are correct.One of these representations is that discoveryrequests, responses, or objections are “neitherunreasonable nor unduly burdensome or expensive,considering the needs of the case, prior discovery inthe case, the amount in controversy, and theimportance of the issues at stake in the action.” Rule26(g)(B)(iii).The 1983 Advisory Committee Note explains thepurpose of this Rule. It “imposes an affirmative dutyto engage in pretrial discovery in a responsiblemanner that is consistent with the spirit andpurposes of Rules 26 through 37.” Moreover, Rule26(g) “is designed to curb discovery abuse byexplicitly encouraging the imposition of sanctions.” Itprovides “a deterrent to both excessive discoveryand evasion by imposing a certification requirementthat obliges each attorney to stop and think aboutthe legitimacy of a discovery request, a responsethereto, or an objection.” Advisory Committee Noteto 1983 Amendment to Rule 26(g).As with the Rules described here, Rule 26(g)addresses proportionality on several levels. First, it isself-executing: it requires an attorney to “stop andthink” before engaging in an act related to discoveryand affixing his signature to a document. Second, itempowers courts to address whether discoveryrequests, responses, or objections are intended toincrease cost and delay or are unreasonablyburdensome or expensive, taking into accountfactors similar to those described in theproportionality rule. Mancia v. Mayflower TextileServs. Co., 253 F.R.D. 354 (D. Md. 2008),demonstrates the potential utility of Rule 26(g) toachieve proportionality.For a broader discussion of proportionality in civillitigation, see The Sedona Conference® Commentaryon Proportionality in Electronic Discovery, availableat www.thesedonaconference.org
  9. 9. Preservation and Proportionality | 7© 2011 by Zapproved Inc. and Ronald J. Hedges2011 Case LawProportionality, Preservation and SpoliationThe following list of cases provides a sampling of opinions issued in 2011 where proportionality was a factor indetermining the scope of preservation and/or discovery.McNulty v. Reddy Ice Holdings, Inc., 2011 WL 116892 (E.D. Mich. Jan. 13, 2011)Defendant sought a court order specifying conditions for discovery (including a reasonable list of searchterms) due to the massive amount of data that had been preserved; the court required both parties to meetand confer in good faith to negotiate a reasonable scope.United States ex rel. McBride v. Halliburton Co., 2011 WL 208301 (D.D.C. Jan. 24, 2011)Plaintiff requested additional production of emails from an expanded list of custodians, despite significantproduction that had already been completed. The court determined that the plaintiff had failed todemonstrate that missing emails were crucial, and that additional discovery was not warranted.Star Direct Telecom, Inc. v. Global Crossing Bandwidth, Inc., 2011 WL 1125493 (W.D.N.Y. Mar. 21, 2011)Plaintiff sought disclosure of emails, despite the defendant’s argument that the information being requestedwas not relevant, responsive or readily accessible. Despite considerable expense, the court asserted that therequested emails were relevant, that the defendant had a duty to identify not readily accessible sources inits discovery response, and granted the motion to compel.Wood v. Capital One Servs., LLC, 2011 WL 2154279 (N.D.N.Y. Apr. 15, 2011)The defendants sought protective orders against extensive discovery, invoking the rule of proportionality asset forth in Rule 26(b)(2)(c). The court agreed, determining marginal relevance was far outweighed by theburden of responding given the exceedingly modest amount at stake.Surowiec v. Capital Title Agency, Inc., 2011 WL 1671925 (D. Ariz. May 4, 2011)Finding gross negligence for inadequate preservation efforts and discovery misconduct, including failing toissue a timely litigation hold and suspend routine document destruction when the defendant should havereasonably anticipated litigation, the court imposed monetary sanctions and an adverse inferenceinstruction.Gaalla v. Citizens Medical Ctr., 2011 WL 2115670 (S.D. Tex. May 27, 2011)Plaintiffs sought sanctions in response to the defendant’s failure to preserve disaster recovery backup tapes.The court ruled against sanctions, finding that preservation efforts were reasonable, including issuing atimely litigation hold, making timely snapshots of relevant email accounts and instituting journaling.E.I. du Pont de Nemours and Co. v. Kolon Indus., Inc., 2011 WL 1597528 (E.D. Va. Apr. 27, 2011)Despite a claim by the plaintiff that critical information was lost, the court denied sanctions for willfulspoliation, citing that a defendant’s duty to preserve is not absolute, but must only be reasonable andproportional to the circumstances.Pippins v. KPMG LLP, No. 11 Civ. 0377 (CM)(JLC), 2011 WL 4701849 (S.D.N.Y. Oct. 7, 2011)KPMG sought a protective order to limit the scope of its preservation obligation or to shift a portion of itspreservation costs to plaintiffs. In response, the court chose to exclude to apply a “proportionality test” topreservation and denied the protective order. See following page for more detail.
  10. 10. 8| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesPippins v. KPMG Focuses on ProportionalityThis case involves the treatment of exempt employees under the Federal Fair Labor Standards Act and New YorkState Labor Law. The defendant sought a protective order to limit the scope of its preservation efforts, advocatinga proportionality test as outlined in FRCP Rule 26(b)(2)(C). The two parties had failed to reach agreement as towhat was reasonable to preserve, and the defendant had sought a protective order to limit the burden ofpreserving computer hard drives at considerable expense for thousands of former employees who might fall withina potential nationwide FLSA collective.The court denied the motion, failing to rule on the potential material relevance of the information retained onemployee hard drives, nor if ongoing preservation would be duplicative of other discovery materials beingpreserved.Amicus Brief filed for Case 1:11-cv-00377-CM-JLC Pippins v. KPMG LLP OrderOn November 4, 2011, attorneys for the U.S. Chamber of Commerce submitted an amicus brief in support of thedefendants in the Pippins v. KPMG case, citing the Magistrate’s Judge’s order as having profound significance tobusinesses in America. The brief argues that the judge made two errors of law:First, he held that the duty to preserve electronically stored information was not limited by anytest of proportionality. Second, he held that every member of the proposed plaintiff class orcollective action was a “key player” for purposes of discovery and the retention of electronicinformation. Both holdings are wrong, unprecedented, and—if affirmed here and followed byother courts—would be highly detrimental to the conduct of civil litigation under the FederalRules. [p. 2]After effectively arguing against the finding of the court, the brief concludes:In disregarding the proportionality principle and in treating every potential class or collectiveaction member as a “key player,” the Magistrate Judge set a dangerous precedent. … Moresignificantly, however, because of the threat of sanctions, a decision—like the MagistrateJudge’s—that overstates the duty of preservation will effectively become the law. For in theabsence of controlling authority, parties and their counsel have no way to know in advance whatstandard a court will ultimately apply, and in an overabundance of caution, they may feelobligated to follow the broadest standard of preservation adopted by any court. [p. 9]See Appendix to read the amicus brief in its entirety.
  11. 11. Preservation and Proportionality | 9© 2011 by Zapproved Inc. and Ronald J. HedgesPerspectives onPreservation and ProportionalityThe opinions expressed in the following commentaries are solely those of the individual author andshould not be attributed to his/her firm or its clients. The comments should not be construed as legaladvice or opinion and are not intended to provide legal advice or to cover all laws or regulations thatmay be applicable to a specific factual situation.
  12. 12. 10| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesProportionality Shouldn’t Reward IncompetenceBy Craig BallLitigants have been ignoring e-discoveryobligations with impunity for so long they’ve cometo think of it as an entitlement. Protected frompredators, few have evolved. But now thatopponents and courts are waking to thisfailure, those who’ve failed to adapt arefeeling exposed. They don’t like it, andthey want protection. They call it“proportionality.”Proportionality sounds wholesome andvirtuous, like “patriotism” or “faith.” But itmay be something else altogether.We are barely out of the starting blocksin the evolution of e-discovery. It’s just too soon togive lawyers and their clients another reason todefer acquiring genuine e-discovery expertise.The much-ballyhooed “rise in sanctions” isdesigned to mislead. The solid metrics we have onspoliation prove that the sanctions risk for negligentnon-preservation remains miniscule (.00675% per a2011 report from the Federal Judicial Center). Putsimply: In the United States, you are more likely tobe hit by lightning than to be sanctioned for non-preservation of ESI.More significant than the piddling increase in thefrequency of sanctions is the consistency of thecircumstances under which courts are imposingsanctions. Litigants are not being sanctioned fordiligent, good faith efforts gone awry. As always, theoverwhelming majority of e-discovery sanctionsdecisions turn on venal acts like intentionaldestruction of evidence and contemptuous disregardof discovery obligations. Sanctions continue to be aresponse to really bad behavior.So let’s tell it like it is: The claim that diligent,responsible litigants are being sanctioned forinnocent e-discovery errors is hogwash.Why, then, are litigants so irrationally terrified ofcourt-imposed sanctions that they elect to sanctionthemselves by embracing monumental inefficiency inpreservation instead of making sensible, defensiblechoices?Most would say, “We are over preservingbecause the plaintiffs demand it and we are afraid ofbeing sanctioned if we guess wrong and fail topreserve something.”There are two ways to deal with monumentalinefficiency: become more efficient or accept theinefficiency. To achieve the former, you rewardefficiency and penalize inefficiency. You’re relegatedto the latter when you shield theinefficient from the consequences of theirfailure. To the extent “proportionality” is abyword for “let us err with impunity,” it’stoo soon in the evolution of e-discovery tobe so resigned to incompetence. Ifanything, we need more sanctions forincompetence, not more safe harbors.It’s the Plaintiff’s Fault!Absent a court order, the scope of preservation isdetermined solely by the party with care, custody orcontrol of the electronically stored information. Anopponent can demand any scope of preservation,just as an opponent can demand any amount inmoney damages. An outsize demand for damagesdoesn’t establish the true value of a case anymorethan an outsize demand for preservation establishesthe proper scope of preservation. In each instance,parties must make an assessment based on facts,experience and risk tolerance, and the other side’sdemands have little, if any, sway.“The plaintiff wanted more” wouldn’t justify adecision to overpay to settle a case, yet, that’s thejustification frequently offered for over-preservation. The plaintiff always wants more--that’swhy there’s a lawsuit. But a plaintiff’s preservationdemand doesn’t define or enlarge the preservationduty. Not one bit. At best, a preservation demandfixes the latest date on which the common law dutyattaches and undercuts claims of innocent oblivionto sources of relevant ESI.It’s not the plaintiff’s fault.But What If We Guess Wrong?Litigants shouldn’t guess wrong—not becausethey can’t be wrong but because they shouldn’t beguessing. They should be making reasonedjudgments based on reliable intelligence. It’s theabsence of reliable intelligence and the paucity ofsound judgment that account for the vast over-
  13. 13. Preservation and Proportionality | 11© 2011 by Zapproved Inc. and Ronald J. Hedgespreservation seen. “Keep it if it might containsomething relevant” is lazy lawyer advice. Instead,when you know what you have, you can makeefficient and defensible choices. “Knowing” meansunderstanding how to investigate, search andinterpret ESI.Pure Heart, Empty HeadGrafting proportionality onto preservation, wemust be vigilant to demand a high level of diligence,expertise and accountability from those decidingwhat to keep and what to discard. A pure heartshould not be a sanctions shield if it serves an emptyhead. Until counsel and clients demonstrate thatthey can capably and cost-effectively identify,manage and search ESI, they will reliably misjudgethe cost and burden of preservation. Sanctions forfailure to preserve shouldn’t turn on a defendant’ssubjective (and inherently partisan) assessment of acase’s importance or value, but on an objectiveexpert standard.Moreover, a proportionality inquiry shouldn’treward incompetence. If high cost or burden isdriven by subpar management of ESI, courts shouldassess the burden and cost measured against theproper information management practices thatshould have been employed and give no quarter tochaos.Can Rule 26(b)(2)(C) Help?The duty to preserve evidence doesn’t flow fromthe rules of procedure. It’s a common law duty.Discovery, by contrast, is a creature of statute. It’s aright afforded and bounded by the rules ofprocedure. This is no trivial distinction. The FederalRules of Civil Procedure may not abridge substantivecommon law rights without a congressionalmandate. Thus, it’s improper to extend the reach ofthe Rules to limit substantive rights absent a clearstatement of intent by Congress.The proportionality language in Rule 26(b)(2)(C)is a limitation on discovery “otherwise allowedunder these rules or by local rules,” not anabridgement of common law obligations. Further,the language of the Rule is expressly geared to theCourt reining in requests for discovery in pendinglitigation where the interests of all parties can bepresented and weighed. It’s a rule designed toprotect one party from the oppressive conduct ofanother. Nothing in the Rule suggests that it wasintended to limit pre-suit obligations or to insulate aparty from the consequences of the party’s ownfailure to preserve relevant evidence.Clearly, Rule 26(b)(2)(C) can’t be pressed intoservice as a safe harbor for botched preservation,but it can prove instructive to courts weighingsanctions for failure to preserve relevant evidence.Though the standards for imposition of spoliationsanctions vary across the circuits, all assess thereasonableness of the respondent’s conduct and theharm flowing from the alleged spoliation. In arguingthe reasonableness of their conduct, a party mayseek to demonstrate that the burden or expense ofthe preservation outweighed the likely benefit of thedata not preserved considering the needs of thecase, the amount in controversy, the partiesresources, the importance of the issues at stake inthe action and the importance of the discovery inresolving the issues. In seeking to mitigate thealleged harm, litigants can show that the evidencenot preserved can be obtained from a source moreconvenient, less burdensome, or less expensive thanthe source not preserved.Mom and Apple PieIf proportionality is code for “don’t hold usresponsible for our own bad decisions,” beware. Butif it signifies that counsel must become adept atunderstanding client data and managing risk,fantastic! If it means that judges, too, will learn tonavigate digital evidence and undertake to interveneearly and aggressively to keep discovery focused andaffordable, then proportionality really is mom andapple pie!Craig Ball of Austin is a Board Certified trial lawyer,certified computer forensic examiner and electronicevidence expert. Hes dedicated his globetrotting career toteaching the bench and bar about forensic technology andtrial tactics. After decades trying lawsuits, Craig now limitshis practice solely to serving as a court-appointed specialmaster and consultant in computer forensics and electronicdiscovery, and to publishing and lecturing on computerforensics, emerging technologies, digital persuasion andelectronic discovery. Craig writes the award-winning “Ballin Your Court” column on electronic discovery for LawTechnology News and is the author of numerous articles one-discovery and computer forensics, many available atwww.craigball.com.
  14. 14. 12| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesEffective Education Will Lead to ProportionalityBy Kevin F. Brady, Connolly Bove Lodge & Hutz LLPLitigants are struggling to manage the increasingdemands of preservation due to three reasons:volume, costs and risk of sanctions. By all accounts,traditional approaches to data preservation andproportionality are not working. Why? Formany litigants it is the lack ofunderstanding of the rules, the data andthe technology. For many lawyers givingadvice to clients, it is the lack ofunderstanding of the data and thetechnology that leads to an inability tomeaningfully discuss proportionality in thearea of preservation.Companies need and want guidance toknow how they should operate.Corporations doing business nationally andinternationally are faced with multiple state andfederal law standards. Sometimes there can bedifferent standards within a state or a federaldistrict. This forces the company into a Catch-22situation – does it wait to see where the litigation isgoing forward and preserve to that standard (whichcan be problematic if you are forced into a PensionCommittee situation where the case is moved fromone jurisdiction to another) or does it just determinethe most stringent requirements and act accordingto those standards and possibly waste tremendousamounts of resources and time?Companies want to know what the business andlegal risks are that are associated with variousbusiness actions. They do not have that now withrespect to preservation and spoliation. They are notin business to waste the resources of theirshareholders, and if they do, then they won’t be inbusiness for long.While these stakeholders search for a solutiongrounded in reasonableness and proportionality,those concepts alone will not provide the answerbecause they are already part of the problem.Reasonableness and proportionality are principlesthat are already contained in the rules starting withFRCP 1 and 26. The failure is in the implementation,and the solution lies in more structure and specificbenchmarks in a rule whether it is in FRCP 26 or 37.There also needs to be uniformity in the applicationof the preservation and proportionality analysis andthat only comes with two things: more guidance inthe rules and enforcement of the rules.For companies, the concepts of reasonablenessand proportionality must start with the recordsmanagement process. There needs to bean effective and efficient recordsmanagement process in place that canquickly transition to a preservation processwhen the duty to preserve is triggered.This is a major first step on the path ofreasonableness and proportionality.Companies waste time and resourceswaiting to implement their preservationprocess until they see where the litigationwill occur and what the law of thatjurisdiction is.In Delaware for example, home of the majority ofthe Fortune 500 companies, process is paramount interms of determining the reasonableness of acompany’s actions or inactions. Companies aregiven guidance in two ways. First, there is theDelaware General Corporation Law which providesspecific instruction for companies to perform certainfunctions. The statutory guidance is supplementedwith a significant body of case law to provide moreguideposts for companies to measure thereasonableness of their actions.While this is not a perfect system, it is workingand the proof is in how many companies areDelaware corporations or LLCs. But even that wouldnot be enough for the current problems withpreservation and proportionality. In addition tomore specific rules and case law, we need effectiveeducation of all constituents – lawyers, judges, andclients.We have had the e-discovery changes to theFRCP for five years and by all accounts, a majority ofthe affected constituents have yet to really grasp theimportance of the rule changes or theirramifications. What we need is effective educationwith incentives for all constituents to engage inmeaningful discussion which can lead toproportionality. It is only when both sides areeducated in the law and informed as to the nuancesof the data and technology that they are dealingwith in their particular case, will there be any hope
  15. 15. Preservation and Proportionality | 13© 2011 by Zapproved Inc. and Ronald J. Hedgesfor real and meaningful discussion of reasonablenessand proportionality.Kevin F. Brady is a Litigation Partner in and chair ofConnolly Bove Lodge & Hutz’s Business Law Group. Kevin isthe chair of the Business Law Group and the InformationSecurity, Electronic Discovery and Records ManagementGroup. He represents clients in a variety of areas includingcorporate litigation, commercial litigation, electronicdiscovery and records management, insurance litigationand arbitration and mediation.Improved Records Management Reduces ESI for a MoreProportional ResponseBy Eugenia Brumm, Ph.D., CRM, FAI, Huron ConsultingRule 26 (b)(2)(C), referred to as the“proportionality rule” was crafted to limit the scopeand extent of discovery because of the“large volume of ESI and associatedexpenses, now typical in litigation.”3Withexceptionally large volumes, difficultiesarise in identifying, locating and preserving“core relevant” information because largevolumes of information are created, used,and maintained to satisfy businessoperations—not to respond to e-discoveryrequests. Compounding problems, manyorganizations have trouble retrievingrelevant information in a timely mannereven for daily needs. Stories abound from thosewho have performed valiant workarounds to locateand retrieve data that resides in multiple locations,formats and systems, exists in multiple versions, andlacks any sort of naming convention. Ultimately, anunnecessary burden is placed on the participants inthe e-discovery process, who must create logic andorder out of a morass of information.However, these issues can be minimized byensuring that a solid records and informationmanagement (RIM) program is proactively in place.Recognizing the impact that managing informationhas on the e-discovery process, the ElectronicDiscovery Reference Model (EDRM) places3“The Sedona Conference® Commentary on Proportionality inElectronic Discovery,” The Sedona Conference Journal, Vol 11, p.293.“information management” at the forefront, with aconstant role throughout the e-discovery workflow.However, the EDRM initiative views RIMmainly from a risk mitigation and decreasedvolume perspective through recordsretention and disposition. Althoughretention and disposition do reducevolume, RIM Program components canhave a profound impact on e-discoveryprocesses in additional ways:1. By identifying information to createand capture – Addressing records creationand determining which information trulyneeds to be captured reduces volume,while simultaneously ensuring that necessaryinformation is indeed captured, thus reducing thepossibility of information gaps.2. By defining the form and structure forinformation and the technologies to use – Thisensures that information is entered into theappropriate system, that it retains its integrity, andthat the discovery team can rely on informationwithin systems.3. By creating and managing metadata –Describing a resource with metadata allows it to beunderstood by both humans and machines,promoting interoperability. RIM metadata is criticalto the success of an e-discovery initiative, enablingidentification of the information and, thus, a laser-like search for information by predefinedparameters. This reduces the volume that iscollected.4. By organizing information – A comprehensiveRIM program includes the development of an
  16. 16. 14| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesinformation organizing architecture, a term that isused here to define the practices and activitiesfocused on developing standardized organizingschema with terminologies to support usability andretrievability in the digital landscape. Thisarchitecture is critical for daily business operationsand for the e-discovery process: It helps define the basic organization forunstructured information It paves the way for better implementationof existing content systems and betterorganization of network folder structures It prevents the over-collection ofinformation during e-discovery5. By developing retention requirements andimplementing destruction/expungement ofinformation – This ensures that records are retainedonly for as long as needed or required. This RIMprogram component, often emphasized in e-discovery literature, reduces volume prior to e-discovery, and, if it is routinely implemented in thenormal course of business, supports “defensibledisposal,” as an important end goal.6. By addressing the stages of information –Transitory information, drafts, ephemeral and socialnotes are addressed, with procedures andmechanisms designed to ensure their quick demiseonce they have served their intended purpose.Short-lived information comprises a largepercentage of ESI that does not serve a business orregulatory purpose.The concept of proportionality is well-intentioned and should be applied when discovery isprotracted or requests are excessive. The largevolumes of ESI, however, can be reduced byeffective records and information management, thuslimiting the instances in which proportionality mustbe exercised.Dr. Eugenia Brumm, CRM, FAI is a Director at HuronConsulting. She has been in the Records Management fieldfor over 20 years, as a practitioner, consultant andacademic and has been involved with document imagingsince 1988. Dr. Brumm has developed several RecordsManagement Programs from scratch, has authored abook, written for numerous publications, and receivedprofessional awards for her work in Records Management,including the prestigious Emmett Leahy Award, the BrittLiterary Award and the Christine Zanotti Award.Rule 1 Should Guide UsBy David Cohen, Reed Smith LLPThe Federal Rules of Civil Procedure start withRule 1: *these rules+ “should be construed andadministered to secure the just, speedy, andinexpensive determination of every actionand proceeding.”The principles of just, speedy andinexpensive are the timeless standardsthat transcend technology and serve toguide the evolution of our civil litigationsystem. The idea of proportionality isimplied by these standards; standards thatapply to all parties and should beinterpreted broadly to apply from thepoint litigation can be reasonablyanticipated.As a practical matter, however, these high-minded ideals often collide with reality. Litigationadversaries, particularly where they do not have alot of their own documents to produce, may demand“everything” in discovery and strategically usediscovery to burden their opponentor create a claim for sanctions. Whenlitigation strikes, many lawyers advise theirclients to “keep everything” to minimizethe risk of sanctions. It is not always easyto predict what every judge will findrelevant and discoverable.When considering the scope ofpreservation, real world companies needto take into account the bigger picture,including the monetary implications of apreservation strategy. One starts withunderstanding there is risk if you don’t preservevery, very broadly. Yet we need to look for
  17. 17. Preservation and Proportionality | 15© 2011 by Zapproved Inc. and Ronald J. Hedgesreasonable places to draw the lines, which requireshonesty, hard thinking, and often sampling, todetermine where the relevant information is to befound. In the end, it often requires judgment on thepart of the organization – as outside counsel, it is ourjob is to guide them to make reasoned anddefensible decisions.Certainly a challenge in all of this is never beingable to foresee all the possible outcomes. Thereis always that risk of ending up embroiled in a casewhere a judge might disagree with the clients orattorneys good faith judgment. No one wants to bethe victim of a sanctions opinion, or a reproof fromthe court, so those concerns tend to drivethe “save everything” approach.When developing a preservation strategy with aclient, several approaches can help as the casedevelops. The first recommendation is to do a goodjob tracking exactly what are the costs of broaderpreservation efforts. It is important to document thedecisions and assess the trade-offs – how much willstoring back-up tapes cost or how many man-hoursare used to implement and maintain a legal hold byeach recipient. This information is invaluable innegotiating a narrower scope of discovery, and muchmore powerful than simply purporting that it “coststoo much!”Another important consideration is assessingrelevancy. Regardless of cost or burden, ifinformation is potentially relevant to disputedissues, we have an obligation to preserve it. Whenmaking culling decisions, we can employ samplingtechniques in order to test the data and determinewhether our judgments are sound with regard towhere the relevant information can or cannot befound. We need to be able to defend our decisionsto exclude data – for example, reviewing a randomselection from what our search terms didn’t “hit”and showing none contained any relevantinformation to any disputed issues in the case. Asimilar approach can apply to preservation efforts,but there the risks can be even greater becausethere is no way to “undo” decisions not to preserve.We are seeing increasing enlightenment amongattorneys and judges about the importance ofproportionality and taking reasonable measures topromote the quick and efficient resolution ofdisputes between parties. I would like to see theRules made clearer that the concept ofproportionality extends to preservation efforts.While I know those efforts are underway, it takes along time to get rules developed and enacted.Meanwhile, it is important to continue stressing e-discovery cooperation between parties, as well ascontinuing vigorous conversations so that everyoneinvolved in civil litigation becomes better informed,and we can reduce the potential for disputes aboutwhat is or is not deemed reasonable andproportional.David Cohen has more than 25 years of commerciallitigation experience in a variety of subject matters. Heserves as special e-discovery counsel in many cases,represents companies in complex litigation matters andalso counsels clients on records management and litigationreadiness issues.He has been involved in setting up the E-Discovery Special Masters program in the U.S. DistrictCourt for the Western District of Pennsylvania, and he hasserved as a court-appointed E-Discovery Special Master inthat jurisdiction. David has authored numerous legalpublications and is a frequent presenter at continuing legaleducation seminars regarding e-discovery, technology andlitigation tactics.
  18. 18. 16| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesCooperation and Information Standardization inHealthcare Can Show a Path to ProportionalityBy Dr. Richard Esham, CPSII am not an attorney, but a physician who stillworks in the healthcare industry but nowwith a company providing critical softwarefor running hospitals, so my perspectivewill undoubtedly be unique among thisesteemed group. While I do not purportthat the healthcare community hasmagically decoded the challenges facedregarding proportionality, it may be thatsome lessons can be learned.In our world the shift from paper todigital has been embraced. The storage ofelectronic records is so much moreeconomical than the huge warehouses that we usedto have to maintain to retain all of the medicalrecords for years. It was an absolute nightmare tostore it. The shift to electronic health records hasbeen crucial to the success of local, regional, andnational goals to improve patient safety, improvethe quality and efficiency of patient care, and reducehealthcare delivery costs.Perhaps the frustration I sense among thoseinvolved with civil litigation stems from a loss ofperspective and a nostalgic view of an “all paper”world, when life was seemingly simpler. However,having everything readily accessible should make forhaving the pertinent information when needed – notto mention the economic and societal benefits.The healthcare industry has been so sensitized topreservation, maybe more than any other industry,that it’s just taken as a matter of course that we aregoing to preserve information. And when I saypreserve it, I mean preserving all of it. The real issuethat comes up is at what point we are able todispose of the information. Naturally, we tend to erron the side of retaining records for 7, 10, 15 or moreyears. We do have guidelines so that we can manage“down” that information as needed, a process thatwe’ve evolved over years and with which I see manyorganizations outside of healthcare still struggle.As you might expect, requests for production ofinformation are commonplace in our industry. Wehave migrated to a format called the Continuity ofCare Document, or CCD, as the format we typicallyuse to provide clinically relevant informationbetween providers. This is also the type ofinformation we would provide upon a legalsubpoena. We can produce all or part ofthe CCD upon request for patients, andoften do. In essence, this consistency offersus a path to proportionality because therequired information is in one place, in astandardized format and the recordprovides a detailed audit trail.Among the healthcare community,there is generally a spirit of cooperationand willingness to exchange information,given the right permissions to do so. Unlikethe adversarial relationship in the legal world, weare generally working toward a common goal ofpatient care. This spirit of cooperation ensures thatinformation is readily accessible. Perhaps the legalcommunity could take a cue from this to make thetransfer of information smoother, focusing on thegoal of improving our judicial system.While the healthcare industry has itsimperfections, we do handle, retain and produceinformation better and more efficiently than mostindustries. We start with a disciplined culture ofcapturing information in patient medical recordsthat is consistent, with severe penalties for not doingso. We embrace the digital storage of informationand see it as a great benefit rather than a burden.We have developed policies for recordsmanagement to responsibly dispose of informationassets. We have a standardized way to maintain andshare records which lowers the burden ofproduction. Perhaps some of the areas where wehave learned will inspire attorneys and judges tolower the preservation burden and manageinformation in a way that embraces proportionality.Dr. Richard Esham, Corporate Medical Director of CPSI, aleading provider of healthcare information solutions forcommunity hospitals with over 650 client hospitals in 45states and the District of Columbia. Dr. Esham spent 16years as a practicing internist before spending the next 10years as a professor at the University of South AlabamaSchool of Medicine. He joined CPSI in 2003 and worksclosely with hospitals in modernizing their informationmanagement systems.
  19. 19. Preservation and Proportionality | 17© 2011 by Zapproved Inc. and Ronald J. HedgesProportionality Isn’t the Challenge, Operationalizing It IsBy Maura R. Grossman, Wachtell, Lipton, Rosen & Katz†It is difficult to fathom that Federal Rule of CivilProcedure 26(b)(2)(C)—which requires the court to“limit the frequency or extent of discovery” if “theburden or expense of the proposeddiscovery outweighs its likely benefit”—does not apply to something as inextricablyintertwined with discovery as thepreservation of ESI. Indeed, the Manual forComplex Litigation (Fourth) recognizes that“*a+ blanket preservation order may beprohibitively expensive and undulyburdensome for parties dependent oncomputer systems for their day-to-dayoperations.”4“Because such an order mayinterfere with the normal operations of theparties and impose unforeseen burdens,”courts must carefully consider “the need for apreservation order and, if one is needed, the scope,duration, method of data preservation, and otherterms that will best preserve relevant matterwithout imposing undue burden.”5“Efforts shouldbe made to “minimiz*e+ cost and intrusiveness andthe downtime of the computers involved.”6Andpreservation orders should “exclude specifiedcategories of documents or data whose cost ofpreservation outweighs substantially their relevancein the litigation, particularly … if there are alternativesources for the information.”7Given the rampantexplosion of ESI, if the Federal Rules are to have anychance at being “administered to secure the just,speedy, and inexpensive determination of everyaction and proceeding,”8then preservation of thatinformation must be restricted to what isproportional.But putting proportionality into practice can beextremely challenging. The challenges arise becausepreservation decisions are often made unilaterally—before a suit has ever been filed—when choicesabout the triggering event and the scope of4Federal Judicial Center, Manual for Complex Litigation (Fourth) §11.442, at 73 (2004).5Id.6Id.7Id. § 11.442, at 74.8Fed. R. Civ. P. 1preservation may later be subject to 20/20hindsight. It comes as no surprise, then, that manyorganizations end up saving far more than theyshould due to fear of spoliation sanctionsand the ensuing reputational damage.Another significant challenge to theapplication of the proportionality principleis that such application is predicated on theability to evaluate intangible or hard-to-quantify factors such as “reasonablycalculated,” “likely benefit,” “burden,”“expense,” and “importance.” If onecompares the application of theproportionality principle to the applicationof a speed limit, it is easy to see theproblem. Imagine, for a moment, drivingdown the highway and seeing a sign that said:“Don’t drive any faster than is reasonably necessary,considering the importance of your timely arrival,the risk to yourself and others, and the cost of fuel.”9Applying that instruction would require theinterpretation of numerous intangible factors,making compliance hard to predict and enforcementproblematic, at best. Given sparse guidance in thecase law on the topic of proportionality—particularlyin the realm of preservation—it is unclear how onewould define or quantify the constraining factors, letalone what arbitrary constraints might be imposed,or the degree to which those constraints mightimpact the conduct of e-discovery.10Proportionality in preservation also can posechallenges due to the misalignment of expectationsbetween the parties to a case. Early in the litigation,a requesting party may send an omnibuspreservation letter demanding that the producingparty save everything under the sun (“and a pony,”as Chief Magistrate Judge Paul W. Grimm has beenknown to say). In the requesting party’s mind, if anyof those items turn up missing, they have grounds9See Maura R. Grossman and Gordon V. Cormack, Some Thoughtson Incentives, Rules, and Ethics Concerning the Use of SearchTechnology in E-Discovery, 12 Sedona Conference J. 89, 102(2011).10Id.† The views expressed herein are solely those of the author andshould not be attributed to her firm or its clients.
  20. 20. 18| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesfor a spoliation motion. Yet in practice, we all knowthat such boilerplate requests are routinelyexcessive and unwarranted.The most appropriate response under thesecircumstances may be for the responding party toexplain what preservation actions it intends to take,and why they are reasonable and proportional,offering to have a meet-and-confer if the proposedplan is deemed to be insufficient. Collaboration thenensues—or not. Regardless, by doing this, theproducing party has thereby placed itself in a betterposition and put the onus back on the requestingparty to justify its excessive and disproportionaldemands.Identifying and preserving ESI for a limitednumber of “key players” rarely poses any significantissues, but the costs begin mounting quickly when acompany has thousands of custodians all over theworld and no centralized means for preserving orcollecting the data. And of course, the mostsignificant costs lie in the subsequent review of theESI, although the application of advanced searchtechnology is beginning to provide some relief in thisregard.11Even if technology-assisted review (a.k.a.“predictive coding”) can significantly decreasereview costs, these tools still provide little reliefwhen it comes to preservation.12Proportionality considerations also need tofactor in hidden costs, such as the cost of disruptingan organization’s business operations due topreservation efforts. The hard costs of processingdata are well documented, but business interruptionis much harder to quantify and argue before thecourt. Yet these hidden costs can be substantial.Many of the stakeholders in the civil litigationcommunity understand the potential benefit ofapplying the proportionality principle, but therealities of business operations, the evolution of ESI,and the challenges outlined above continue to11See Maura R. Grossman and Gordon V. Cormack, Technology-Assisted Review in E-Discovery Can Be More Effective and MoreEfficient Than Exhaustive Manual Review, XVII Rich. J.L. & Tech. 11(2011), http://jolt.richmond.edu/v17i3/article11.pdf.12See Thomas Y. Allman, Jason R. Baron & Maura R. Grossman,Preservation, Search Technology & Rulemaking, Submission to theCivil Rules Discovery Subcommittee for the September 9, 2011Mini-Conference at DFW Airport (Sept. 7, 2011), at 10, availableathttp://www.uscourts.gov/uscourts/RulesAndPolicies/rules/DallasMiniConf_Comments/Thomas%20Allman,%20Jason%20Baron,%20and%20Maura%20Grossman.pdf.undermine this goal. Because available guidance isthin, ultimately parties are left to make decisionsbased on the available information at the time—andrevisit and revise those decisions, as necessary, asthe case evolves—hoping that these decisions willlater withstand scrutiny.The recent Dallas Mini-Conference,13and otherforums such as The Sedona Conference®, areinvaluable for soliciting input and having a healthydialogue about the proportionality crisis. But in theend, litigants need to be able to implement areasonable, proportional legal hold process that willensure that relevant ESI is not in jeopardy of beinglost, but they also need a basis for having confidencethat reasonable and good-faith decisions will notlater be second guessed. We already have the rulesat our disposal to do this,14now all we need iscooperation by the parties and support from a well-informed and engaged judiciary to move us closer toa more balanced system that achieves the mandateof Federal Rule 1.Maura R. Grossman is Counsel at Wachtell Lipton, whereshe advises the firm and its clients on legal, technical, andstrategic issues involving electronic discovery andinformation management, both in the U.S. and abroad.Maura is co-chair of the E-Discovery Working Groupadvising the New York State Unified Court System, acoordinator of the Legal Track of the National Institute ofStandards and Technology’s Text Retrieval Conference(“TREC”), and a member of the Steering Committee of TheSedona Conference® Working Group 1 on ElectronicDocument Retention and Production. Maura is an adjunctfaculty member at Rutgers School of Law –Newark andColumbia Law School. She also serves on the advisoryboards of BNA’s Digital Discovery and E-Evidence Reportand the Georgetown University Law Center’s Advanced E-Discovery Institute.13See http://www.uscourts.gov/RulesAndPolicies/FederalRulemaking/Overview/DallasMiniConfSept2011.aspx.14See Fed. R. Civ. P. 1, 26(b)(2)(B), 26(b)(2)(C), 26(f), and 26(g).
  21. 21. Preservation and Proportionality | 19© 2011 by Zapproved Inc. and Ronald J. HedgesRaising the Bar on Proportionality?By John Jablonski, Goldberg Segalla LLPProportionality is in vogue, despite being more orless ignored since its introduction into the FederalRules of Civil Procedure in 1983. E-discoverycommentators – including The SedonaConference™ – argue that more aggressiveuse of Rule 26(b)(2)(C) is the prescriptionfor the current costly preservation and e-discovery ills of the American justicesystem. “Take two 26-b-2-C’s and call mein the morning.” Unfortunately, theproportionality rule has not withstood itsclinical trials in the age of exponentiallyexpanding ESI. So long as the focusremains on preserving all potentiallyrelevant ESI, stronger medicine is needed.A stark example of the shortcomings ofproportionality can be seen in a recent case out ofthe Southern District of NY (Pippins v KPMG, 2011WL 4701849). In Pippins, the defendant appears tohave been caught between a rock and a hardplace. The rock is its self-imposed preservationefforts, undertaken early (perhaps as an easysolution at $600.00 a pop for protection – only tosee the costs escalate to $1.5 million over time) anda hard place (inability to negotiate a reasonablesample of the data being preserved coupled withpotential spoliation sanctions following anyunilateral action).Despite doing exactly what commentators haveurged – seeking relief from the court when facedwith costly and burdensome preservation – thedefendant is stuck. Here, the problems facing theAmerican justice system are made strikingly clear.Rather than making hard choices, courts arereluctant to narrow the scope of preservationbecause the current paradigm is broken. Focusingon saving all potentially relevant information,regardless of cost must stop. Until the paradigmshifts and courts begin focusing on what is materialand necessary, proportionality will not be theanswer. In Pippins, proportionality was not theanswer with the court declining the invitation toapply proportionality to preservation.Absent clear authority and guidance districtcourts will continue to be constrained by the current“better to be safe than sorry” preserve everythingmentality. Some may argue Pippins is an anomaly.The case, from my perspective, merely solidifies theseemingly high bar against applying proportionalityto preservation and it certainly makes it moredifficult for the next corporation seeking toavoid huge preservation costsFor a litigant that is not trying to playgames, proportionality should prevail in theright case, saving countless litigants fromcostly over-preservation. From my clients’perspective (mostly fortune 500companies), this case simply underscoreswhat is wrong with preservation analysis inmost courts today. From Zubulake to thepresent, the focus in spoliation cases hasbeen on what is missing, rather than whatremains. The focus should be on whether sufficientevidence exists to afford a fair opportunity to make acase. With the volume of ESI expanding rapidly intothe clouds and social networking, the loss of a fewemails or a laptop in the sea of other informationshould be the least of our worries. Unfortunately, italmost always is grounds for some sort of sanction.Very soon all litigants will be facing the costlypreservation problems facing larger corporationsnow. Some simple math: by owning one iPhone™,one iPad™ and one laptop computer, a single pro selitigant may own, need to preserve, and strugglewith electronic discovery of the equivalent of 27,072banker boxes containing approximately 135 millionpages of information.15A small “mom and pop”business using just one entry level server, twoiPhones™ and two laptop computers is faced withapproximately nine times the storage capacity of thesingle pro se litigant. These devices together store15Owning a 64 GB iPhone™, 64 GB iPad™ and a laptop containinga 1 TB hard drive, equals a total of 1,128 GB of potentiallyrelevant information. Microsoft’s August 29, 2011 letter to theCivil Rules Advisory Committee equates 1 GB of data with 24banker boxes. Multiplying 24 banker boxes by 1,128 GB of dataequals 27,072 banker boxes. Assuming 5,000 unstapled pages fitinto a banker box, this amount of ESI is equivalent to 135,360,000pages of potentially relevant ESI.
  22. 22. 20| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesthe equivalent of 243,072 banker boxes containingapproximately 1.2 billion pages of information.16In the end, the court did the safe thing pursuantto existing case law and maintained the statusquo. For proportionality proponents the case is adisappointing one. From my perspective it isdisappointing in two ways: (1) the need to preserveall potentially relevant ESI, regardless of cost,trumped the court’s ability to trim the scope ofcostly preservation; and (2) this case will be held upby some to argue that proportionality inpreservation is frowned upon by courts andexercised in the rarest of circumstances. Untilsomeone makes a good case for proportionality inpreservation before a proactive court or appropriate16One small company owning two 64 GB iPhones™, two laptopcomputers containing a 1 TB hard drive each, and an entry levelsmall business server holding 8 TB of data, equals a total of 10,128GB of potentially relevant information. Using Microsoft’s figuresthis amount of ESI is equivalent to 1,215,360,000 pages ofpotentially relevant ESI.rules amendments are enacted, over-preservationwill continue at great expense with seemingly littlebenefit.John J. Jablonski is a partner at Goldberg Segalla LLP. Anexperienced trial lawyer, John consults with Fortune 500companies about records management, retentionschedules, legal hold policies and procedures, pre-litigationplanning, and electronic discovery. John is a frequentauthor in publications and speaker on recordsmanagement, legal holds, and e-discovery. John is Editor ofwww.legalholds.typepad.com, a blog devoted to currentdocument preservation trends. He is also the co-author of“7 Steps for Legal Holds of ESI and Other Documents”(ARMA 2009)
  23. 23. Preservation and Proportionality | 21© 2011 by Zapproved Inc. and Ronald J. HedgesSome Observations Regarding Preservation andProportionalityBy Tom Kelly, K&L Gates LLPI am a litigator who now focuses on electronicdiscovery. I work in the e-DiscoveryAnalysis and Technology (“e-DAT”) group,which assists litigators within K&L GatesLLP as well as those in other law firms inthe preservation, collection, review andproduction of electronic and hard-copydocuments. As such, we encounter, on aregular basis, the issues that parties faceregarding the costs of preservation and therisks of failures to preserve ESI.Obviously, the willful destruction of ESIfor the purpose of preventing the use ofinformation in litigation is intolerable andneeds to be strongly and effectively sanctioned.However, I believe that, in recent years, someparties and lawyers have sometimes misused thelegitimate concern for preservation of relevantmaterials by deliberately making overbroad andunduly burdensome demands regarding thepreservation of a party’s ESI that are not justified bythe claims and defenses in the underlying litigation.These demands appear to have been used toimplement a number of strategies. For example, anyfailure to fully comply with a demand can becomethe basis for motions practice, in which the objectiveis not really the “missing” ESI (the relevance of whichmay be tentative at best under the current, broadscope of preservation), but the monetary sanctionsthat may accrue to the objecting party; in such acase, the “failure to preserve” becomes a hiddencause of action, which may prove more lucrativethan the underlying claim itself. Even if the motionspractice does not result in much by way of monetarysanctions, it can still be an effective way to poisonthe court against the other party. And there is alsothe possibility that a spoliation instruction will beordered as a sanction. Again, the point of getting adiscovery order authorizing such an instruction maynot be so much for its use at trial as it may be for itsin terrorem effect in inducing a settlement.This is not to say that there are not meritoriousmotions regarding preservation. To thecontrary, the reported cases certainlydemonstrate that some parties do notadhere to their preservation obligations inregard to legitimate preservation requestsand requirements. But the temptation totry to take tactical advantage of thefailure-to-preserve motion is a realproblem, somewhat reminiscent of theheyday of the Rule 11 motions practice ofsome years ago. And so long as there isgreat uncertainty -- as there is now -- asto what information is properly subject tothe preservation obligations, the misuse of suchmotions practice will continue.I therefore support efforts to argue for, andarticulate, more definite and objective standardsregarding the duty to preserve ESI. Just as there arenow limitations on the number of depositions andinterrogatories (subject to expansion for goodcause), even though it is possible that relevantevidence might have been uncovered with moredepositions and more interrogatories, so too theremust be temporal and scope limitations on thepreservation and production of ESI, even though itmay occasionally mean that otherwise relevantevidence will not have been preserved.Tom Kelly is a litigator at K&L Gates in Seattle who hasrepresented clients in a broad range of complex litigation,including commercial disputes, class action cases,employment law litigation, trust and estates litigation,defense of professional liability claims, and litigationinvolving municipalities. Tom is a member of the firms e-Discovery Analysis and Technology (e-DAT) group. Thisgroup uses systematic processes and advanced technologyto provide efficient and cost-effective discovery anddocument review legal services, especially with regard toelectronic documents. Tom also serves as an assistantgeneral counsel for the firm, providing legal advice tolawyers in the firms Pacific Northwest offices regardingconflicts and ethics issues.
  24. 24. 22| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. HedgesIn Shaping Proportionality, Bright Lines May Not Be theAnswerBy Browning Marean, DLA PiperThere is no question that preservation andproportionality is a subject that stirs fear,uncertainty and doubt. In today’s judicialenvironment there are more pitfalls in thisarea than in most others that we face.When you look at an organization of anysize, there are so many possible points ofpreservation failure that the uncertainty isdriving up the costs and burden of doing so.One of the real problems is a lack ofeffective information management.Someone once said, “We’re all informationmanagers now, the problem is most of usdon’t know it.” Companies have by andlarge not devoted the resources to putting togethernor followed robust records retention policies, so insome respects they are living with the consequencesof this inattention.There’s another layer in which technology ismoving at such a rate that just when we think wehave mastered locking down data in Worddocuments and emails, new exotic platformsemerge. Data sources like Twitter and Sharepointare dynamic and difficult to capture and control.From my own experience, once the need forpreservation arises and one goes about finding keycustodians and relevant documents, the “90-10Rule” comes into effect (or perhaps the “99-10Rule”). Ninety nine percent of the relevant data isgenerally found in 10 or less custodians. So wheninitiating a litigation hold, start by going to those 10or so and put a hold on their records. Then make aninquiry as to whether or not there is anyone else inthe ‘long tail’ of people that may be involved in theissue which might require further preservation.Manage your cost and burden by focusing on thekey custodians first, then do a risk calculus on howmuch further you need to go based on yourunderstanding of the case, the players involved, andwhether you sense that your opponents areinterested in pursuing a rational preservation orderor using e-discovery as a tool for extortion.Another recommendation I routinely make is toestablish a formal litigation hold committee. Get theright folks together and keep a good database ofthreats that require litigation holds, and just asimportantly, those that do not. The job of thiscommittee is to assess the threats, makereasoned decisions, and keep an audit trail.In addition to such thoughtful analysis,there have been suggestions to seekchanges to the rules to provide brighterlines. Some proposals suggest controllingthe cost of preservation by setting anarbitrary limit on the number of custodiansor data sources in discovery. While I canunderstand the desirability of having abright line to hold on to, I am immediatelyreminded of what satirist Ambrose Biercewrote in The Devil’s Dictionary (1906):Lawyer (n.)- One skilled in circumvention of thelaw.I am always concerned when setting out anumber of bright line tests as one of the alternativespeople are considering. Lawyers will sit down andfigure out ways to subvert, get around, game orwhatever else because their case does not quite “fitthose rules.”Chief Judge Randall R. Rader of the FederalCircuit has recently been advocating reforms thatare specific to patent litigation which addresscontrolling and managing increasing discovery costs.According to his comments, he estimates that onlyone page of every 10,000 is produced in court.On September 27, Judge Rader announced thatthe Federal Circuit Advisory Council unanimouslyadopted a new “Model Order Limiting E-Discovery inPatent Cases” designed to serve as a starting pointto streamline and reduce e-discovery costs byemphasizing production limits. The new ModelOrder phases in production based on presumptivelylimiting the number of custodians, search terms andtimeframes (including limiting requests to fivecustodians and five search terms per party; absent ajoint agreement to modify these limits).While this approach may not be ideally suited forother forms of civil litigation, I appreciate theincremental approach and the requirement for a
  25. 25. Preservation and Proportionality | 23© 2011 by Zapproved Inc. and Ronald J. Hedgesparty to show cause to go beyond such limits. Doingso may provide a reasonable starting point for aproportionality discussion going forward.Browning Marean is a partner in DLA Piper’s SanDiego office. He is a member of the firm’s LitigationGroup and is co-chair of the firm’s ElectronicDiscovery Readiness and Response Group. Mr.Marean specializes in the areas of complex businesslitigation, technology matters, professionalresponsibility, and knowledge management. He isadmitted to practice in California and Texas. Mr.Marean joined the firm (then Gray Cary Ames & Frye)in 1969. He is a member of DLA Piper’s TechnologyCommittee, and is an emeritus member of theCalifornia State Bar Law Practice ManagementCommittee. He is a member of the San Diego CountyBar Association Ethics Committee and the SedonaConference. Mr. Marean is a nationally knownteacher and lecturer on various topics includingelectronic discovery, records retention, knowledgemanagement and computer technology. Mr. Mareanreceived his law degree from the University ofCalifornia, Hastings College of Law and hisundergraduate degree from Stanford University.The Advantage of Transparency in DeterminingPreservation EffortsBy Ariana Tadler, Milberg LLPA great deal of dialogue and debate currentlycenters on preservation issues. The volume of theconversation has increased dramatically based onthe recent outcries of corporations concerning thecosts and challenges huge data generatorsface in complying with what they contendare burdensome preservation obligationsunder the current Federal Rules and caselaw. But the issue is whether the allegedlycrippling costs and burdens associatedwith preservation are really necessary, orare the corporations overreacting to ahandful of cases in which truly bad actorsfaced severe sanctions for willfully anddeliberately destroying evidence. Thereality is that there are no recent cases in whichcourts have imposed severe sanctions on litigantswho have made reasonable preservation efforts andbeen forthcoming about the process. This is whatmany are calling the “fact vs. fear” dilemma.The longstanding and well-established law is thateveryone -- from the largest multinationalcorporations to individuals -- has an obligation totake good-faith, reasonable steps to preservedocuments and information likely to be relevant topending or anticipated litigation. It is not onlyacceptable but incumbent upon parties to discussthe scope of preservation early on to preventdisputes later and to work to curb costs.Transparent discussion about existing data andsystems, and about how to streamline getting themost important information to one’s opponent on aprioritized basis can achieve these goals.The Sedona Conference’s CooperationProclamation and various pilot programsaround the country contemplate this verytype of transparent and cooperativedialogue.I believe that, as officers of the Court,attorneys have a duty to engage in thatdiscussion -- indeed it is consistent withthe precepts set forth in Federal Rule 1,i.e. that the rules are intended to “securethe just, speedy, and inexpensive determination ofevery action and proceeding.” As counsel, one is notonly supposed to be giving clients advice specific totheir litigation strategy and legal rights, but alsoregarding the efficient pursuit and protection ofthose rights.Proportionality as it relates to managingdiscovery costs can play a role in the discussion. Butit would be unfair -- in fact unjust -- to presume thatproportionality is to be assessed exclusively basedon the monetary value placed on a case by aproducing party. Cases certainly have value in termsof potential damages, but, of course, the opinions
  26. 26. 24| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesheld by opposing sides in a litigation tend to differdramatically -- and, more importantly, the FederalRules require that the assessment of proportionality-- that is, whether the likely benefit of requesteddiscovery outweighs the burden and expense it mayimpose -- include consideration of non-monetaryfactors, such as the importance of the requesteddiscovery in resolving the issues in the case, theparties’ resources, and the importance of the issuesat stake in the action. Indeed, many cases haveintrinsic societal value and serve as a deterrent toset or preserve standards and preclude futuremisconduct. Examples of social value considerationsare civil and human rights cases, as well as cases thatcontain measures for non-monetary relief.Once a duty to preserve has attached, anattorney should consult with his client immediatelynot only to assess the types and locations ofinformation potentially subject to preservation, butalso to initiate a transparent conversation withopposing counsel in an effort to reach someagreement as to the expected scope of preservation.Transparency from the outset builds credibility withboth opposing counsel and the court. If the otherside is willing to engage in such dialogue, efforts andagreements can be memorialized in letters or areport to the court. Those efforts will save counsel,their clients, and the court a great deal of time andmoney. Simply put, cooperation lends itself toproductive and cost-effective case management andjudicial economy.Positive personal experience suggests thatcreative and cooperative application of the currentrules is the key that will enable parties to streamlinelitigation, and will reduce costs to litigants,ameliorate the fear factor, and ensure the efficientuse of the court’s resources. Education can go a longway in helping to achieve these goals. Pilotprograms now underway are helping to facilitatethem as well. For example, the Seventh Circuit isnow completing Phase II of its project and reports todate speak of its success. The Southern District ofNew York is in the process of implementing a newpilot program for complex cases that includes aprotocol identifying particular issues, includingpreservation, to be addressed at the outset oflitigation. Such an approach promotes transparencyand keeps the focus of the litigation on the merits,rather than on distractions surrounding datapreservation and sanctions.Ariana J. Tadler is a managing partner at Milberg LLP andhead of the firm’s e-discovery practice. She also serves onadvisory boards for several e-discovery “think tanks,”including The Sedona Conference.Citations: Tadler, Ariana J. and Henry J. Kelston, “Court ProgramsWorking Toward Normalcy in E-Discovery,” New YorkLaw Journal, Oct. 3, 2011. Millberg LLP and Hausfeld LLP, “E-Discovery Today:The Fault Lies Not In Our Rules”, The Federal CourtsLaw Review, Vol. 4, Issue 2, 2011.
  27. 27. Preservation and Proportionality | 25© 2011 by Zapproved Inc. and Ronald J. HedgesPippins v. KPMG Highlights the Need for Proportionalityand Reasonableness StandardsBy Jeane Thomas, Crowell & Moring LLPThe recent opinion in Pippins v. KPMG out of theSouthern District of New York is a timelyreminder of why we need to make progresson reigning in the scope and cost ofpreservation obligations. Like any case, anynumber of factual nuances that had someinfluence on the court may not have madetheir way into the opinion, so my thoughtsare drawn solely from what was included inthe Judge Cott’s opinion from October 7,2011 (2011 WL 4701849).Essentially Pippins rejects the principleof proportionality as applied topreservation requirements. The courtconsidered the obligation of KPMG to preserve thehard drives of thousands of employees who fellwithin the scope of a potential FLSA collectiveand/or putative New York state class action. JudgeCott ruled that KPMG must preserve the hard drivesbecause it had not demonstrated that they did notcontain relevant and non-duplicative ESI, eventhough the class had not yet been certified andKPMG established that it had already incurred morethan $1.5 million to preserve a portion of theputative class’s hard drives, a cost that wouldincreasingly continue to mount. In doing so, thecourt rejected any application of a “proportionalitystandard” as “too amorphous to provide muchcomfort.”From my perspective, this opinion clearlyillustrates how plaintiffs, in this case a handful ofindividuals, can impose millions of dollars in costsupon a company merely by filing a complaint –entirely without regard for whether the claims haveany merit or whether a class will ever be certified.Further, it highlights the need for some kind ofreasonableness and/or proportionality standard thatcourts should apply to the preservation obligationitself.As a practical matter, in the absence of nationaluniformity or standards, decisions like Pippinsbecome the “floor” as to which litigants have tocomply, often before they even know in whichjurisdiction they may end up potentially litigatingsuch issues. This leads to over-preservation, whichcan have enormous cost implications and other risks,and can create very significant and, in myview, unwarranted leverage in thelitigation. Particularly in the world we livein today where companies retain vastamounts of electronically storedinformation, it simply should not be thecase that the filing of a lawsuit – or eventhreatened filing – triggers an obligation topreserve every bit and byte of data thatmight be relevant to the claims or defensesunder the broadest theories of thepotential scope of the case.In addressing ongoing preservationobligations, one of the best opportunities to reduceburden and expense is the Rule 26(f) “meet andconfer” conference. The two sides should gettogether to discuss, among other things, what is andis not reasonable to preserve given the scope of theclaims and the universe of discoverable information.Even in the early stages of the litigation, partiesshould be able to present their views on issues suchas date cut-offs, relevant custodians, more or lessaccessible sources of ESI, and how to handle backupand disaster recover media. In my experience, youoften can get some sort of relief through negotiationwith your adversary. If you can’t reach agreement,then you go to the court as KPMG did after trying toget plaintiffs to agree to limit preservation to asampling of data from the hard drives.Of course, prior to the meet and confer andability to ask the court for a ruling, preservationdecisions are unilateral and there is a tendency topreserve broadly to reduce concerns aboutspoliation claims after the fact. Accordingly,organizations need a thoughtful and reasonedstrategy for how to respond to preservationobligations, although there are always a range ofoptions with different cost and burden impact, andevery case involves making judgment calls along theway.I am not advocating for a rule that specifies ingreat detail what needs to be preserved, whatdoesn’t need to be preserved and under whatcircumstances. However, I do believe we need some
  28. 28. 26| Preservation and Proportionality© 2011 by Zapproved Inc. and Ronald J. Hedgesguidance that codifies the general principle ofproportionality and reasonableness with respect topreservation. In my view, that guidance shouldstipulate the types of factors the courts shouldconsider, or even must consider, in determiningwhether preservation is handled properly and whatsanctions may apply under different circumstances.Even if such guidance results in different jurisdictionshaving differing views on what is reasonable andwhat is proportional, we need to move quickly awayfrom the current situation where the fear ofspoliation sanctions motivates decisions to over-preserve, and toward a more rational approachapplying proportionality and reasonableness toavoid the clearly onerous alternative.Jeane A. Thomas is Chair of Crowell & Moring’s E-Discovery and Information Management Group and apartner in Crowell & Morings Antitrust Group.In her rolewith the E-Discovery practice, Ms. Thomas has managedmany types of E-Discovery matters in both governmentinvestigations and private litigation. She regularly counselsclients on Litigation Readiness Planning, including thedevelopment and application of effective document/dataretention policies, legal hold practices, and corporatecontent policies, as well as E-Discovery response plans. Ms.Thomas is a participating member of the SedonaConference Working Group on E-Discovery, and co-chairsthe Working Groups Healthcare Team. She is also amember of the Advisory Board and Faculty of theGeorgetown University Law Center Advanced Institute forE-Discovery. She regularly speaks and writes on E-Discovery issues.Manage ESI Dangers with Targeted CollectionsBy Dave Walton, Cozen O’ConnorOver the past several years, courts have issuednumerous decisions on sanctions for spoliationexclusively involving electronically storedinformation (ESI) issues. According to aDuke Law Journal article from spring 2011,188 different federal district court judgeshave issued written decisions on e-discovery sanctions, and another 111federal magistrate judges have writtenopinions. These numbers do not include2010, which all commentators agree was abanner year for e-discovery spoliationsanctions.It seems like every day we read about anew decision on this issue. As a result, there is agrowing sentiment among clients and lawyers alikefor preservation and over-collection. "Better to becareful than sorry" is the mantra. As a result, datamanagement costs consume litigation budgets in theblink of an eye. Clients are being forced to settlecases because the ESI costs alone make it tooexpensive to fight. And, all the while, everyone livesin fear of the next big "spoliation" case.Is this the end of litigation as we know it? No.Like it always does, the pendulum is swinging back.The future is targeted collections. Preservation ischeap; collection and review is incredibly expensive.Smart clients and lawyers will learn how to usetargeted collections as the key to bringing sanityback to their litigation practices.Normally, the typical ESI productionworks as follows: Clients receive notice ofpotential litigation. At this point clientsmust retain all potentially relevant data.However, they are faced with determiningthe difficult question of what is potentiallyrelevant in many cases where there isnteven a lawsuit yet. So, they do what anyother logical person would do; they cast awide net to preserve as much as possible.The next step is to figure out what youneed to collect from this broad, massive data set.Once the material is collected, it needs to beprocessed so it can be further filtered and thenultimately gathered into a review set. This data isthen reviewed by counsel for privilege andresponsiveness. This step is extremely expensive.Search terms are used to pull documents from thecollection set into the review set. The problem isthat search terms typically return more than 80percent false positives.Moreover, the average gigabyte of data containsabout 75,000 pages. Assuming the average reviewtime for an attorney is 200 pages per hour, the

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